For various reasons, women face a higher level of financial risk during their lifetime than men. There are differences between men and women with regard to lifespan, lifestyles, income and attitudes which can have a negative effect on a woman’s financial position. Women live around four years longer than men on average and, in a heterosexual relationship, tend to partner with men the same age or older. They are therefore much more likely to be living on their own in retirement than men. Women earn on average significantly less than men and it is harder for them to save for unexpected expenses, their financial goals, or retirement. This is not necessarily an issue for women in a relationship where financial assets are shared, but the reality is that many relationships today end in separation or divorce. Women’s careers are more likely to be interrupted by child rearing or caring for elderly parents. It has been said that for every year a woman stays home to look after a child, she must work five extra years to recover lost income, retirement savings and career promotions.
A survey done in 2013 for the Commission for Financial Capability showed that men tend to have higher financial knowledge than women. This is particularly true of older age groups. Many women, especially older women, lack confidence in dealing with money as a result of this lack of knowledge. Women worry about their long term financial futures and are sometimes more risk averse, however they are more likely to seek and accept financial advice.
It is important that women either increase their knowledge or obtain advice from someone they trust. While everybody should have a financial plan, the increased risks faced by women make it even more important to for women to plan, especially for retirement.