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Why women need to focus on financial planning

04 Mar 2018 
SOURCE: The Sunday Times © Singapore Press Holdings Limited. Reproduced with permission

​1. LONGER LIFE EXPECTANCY


In general, women have a longer life expectancy, compared with men. For example, women here live, on average, six years longer than men, so there is a higher risk of them outliving their spouses. This means more retirement funds are required to fund their twilight years, notes Mr Brandon Lam, Singapore head of financial planning group at DBS Bank.


In the same vein, expenditures for a woman may be higher than that of a man. For the same standard of retirement lifestyle, women may have to set aside a larger amount.


"Women also invest a lower proportion of their assets and have allocated less funds towards their retirement. This may further compound the pertinent need for women to take charge and action on their financials," adds Mr Lam.


2. HIGHER DIVORCE RATE


The divorce rate here has increased. The Women's Charter notes that between 1990 and 2010, the number of civil divorces more than doubled, from 2,178 to 5,433.


And in 2016, there were 7,614 divorces and annulments, a 1.2 per cent increase from 2015, according to the Department of Statistics.


Divorce and separation pose significant risks for many women. While both men and women have similar savings levels while in relationships, women are left with far less when the marriage breaks down. To secure their financial well-being, women need to upgrade their money management skills.


3. GENDER INVESTMENT GAP


Females may save more of their disposable income than men, but they also tend to invest less of it. When they do invest, they tend to go for less risky assets than men.


Women are more likely to hold a higher proportion of their assets in cash or low-yield savings deposit accounts, than in investments.


Mr Lam notes: "Women also generally set aside less for their retirement funds than men. A smaller retirement fund, coupled with a longer life expectancy, further emphasises the need for women to focus on financial planning."


4. FEMALE ILLNESSES AND FRAILTY


Financial experts say that females may be more prone to certain types of medical conditions and critical illnesses and may require additional insurance coverage.


"Insurance planning for women should be tailored with additional coverage for female-related cancers, such as breast/cervical cancer and/or pregnancy complications, and looking at long-term insurance care due to a longer life expectancy," says Mr Lam.


Frailty, which encompasses physical, social and cognitive aspects as well as joint diseases like knee osteoarthritis, also affects women more than men. This compounds the need for them to have adequate medical coverage.


Women can also consider long-term care insurance such as ElderShield, as they might outlive their spouses. This sort of cover can help defray costs associated with long-term care, such as medication expenses, therapy and community hospital care.


Lorna Tan

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