M Bacal Group

Evolving Dynamics in Planning for Sound Financial Futures

A lot has changed in the past 30 years, and the financial industry is no exception when it comes to meeting the financial needs of women, which often differ from those of men.

With women now making many household financial decisions,dynamics are evolving in family finances, insurance, investments, and retirement planning. Sound planning should involve a holistic approach and include collaboration to include multiple perspectives.

Women have a growing role in planning and finances

According to Wealth Professional, “today, women are the primary breadwinners in over 31% of households in Canada. By 2028, Canadian women will control over $4 trillion in assets, almost doubling the $2.2 trillion they control today (1).”

Women have a longer life expectancy

On average, Canadian women are living longer than men by approximately 3.5 years (84.74 vs 81.15), and many are living past age 90 (2). As women determine retirement income needs, it’s important to ensure that these additional years are covered as increased longevity increases the likelihood of needing home care services or entering an assisted living facility.

Women, child rearing, and eldercare

While numbers might be edging upwards for men who become stay-at-home parents, women are still four times more likely to take on this role (3). Women are also far more likely to reduce work hours, take time off or leave work to care for aging parents. In fact, adult daughters provide twice as many eldercare hours to aging parents when compared with adult sons (4). These breaks in employment can have a serious impact on the financial future of a woman.

According to one 2018 study, “stay-at-home parents are half as likely to get a job interview as parents who have been laid off. And the mothers who do find a job are often penalized for their time away. “[W]omen who spend three years or more out of the workforce lose 37% of their earning power. [And] study after study has shown that even the women who do successfully re-enter the workforce after a career break never fully catch up to their earnings potential (5).”

So, what does this mean if you are a woman? Well, you and your partner need to carefully consider risk. What would your income look like if your marital status changed later in life or if your partner were to pass on or become sick, or injured and unable to earn an income? A thorough needs analysis can help provide you with peace of mind in helping with that your financial future.

When your income is crucial

If you are a single-income household, you are certainly aware of all the financial responsibilities that rest on your shoulders. Sound planning is vital since your needs will be different than a two-income household. It is important to consider disability insurance coverage, along with critical illness insurance because there isn’t a second income to defray unexpected expenses. A solid retirement plan may round out your approach, by helping to offer you security and peace of mind.

References

1. Sun Life Global Investments. Where are the women advisors? Why gender equity builds stronger advisory teams Advisor.ca. March 2023.

2. Honderich, Holly. Why ‘stay-at-home parent’ is a job title. BBC. April 14, 2021.

3. Almazora, Leo. How the gender pay gap adds up over women’s lifetimes. Wealth Professional. May 16, 2018.

4. IBID.

5. Honderich, Holly. Why ‘stay-at-home parent’ is a job title. BBC. April 14, 2021.