Gavin Bramley

Financial Planning Secrets every Woman must know

Why write a page on retirement aimed solely at women? Am I trying to alienate my male clients. Hardly. Rather pat my male clients as a group on the back because they are three times more likely to own a retirement plan than their female counterparts. Now rather than rest upon my laurels and say "Job well done", there is clearly a problem here.

This problem is further aggravated by two additional important facts, the first being that a women is more likely to suspend her career when the children arrive and will simultaneously suspend her retirement investments in a retirement annuity, pension or provident fund while her husband continues his contributions uninterrupted. Which partner will have the greater investment sum at retirement; clearly the husband. Now in addition to her retirement sum being smaller, she is also expected to outlive her spouse by some six years. The insurance companies are aware of this and will expect to pay her out for a longer period. Put another way, her capital needs to last a lot longer and hence the annuity she will receive form her retirement fund, even if her value was the same as her husband, will be significantly less than he gets paid. 

Should this apparent unfairness warrant her canning the idea of making provision for herself? Well, there are plenty things in life which are not fair, but that does not mean that we shouldn't go on living life to the fullest extent possible. A woman must make these provisions for the primary reason stated above, but also for the following reasons.

As her husband is likely to die before her she is possibly going to face her final years alone. But what many fail to consider is that the man will be sickly before he dies and many investments may be cashed in, in an attempt to restore his health or to make him as comfortable as possible before he dies. The medical aid benefits are also often depleted after this event leaving the widowed wife with no cover and no savings.

Now this all assumes a happy couple, but we know in South Africa that divorce breaks up many a woman's retirement plan especially if she was relying on her husband to make all the provisions. Often through his planning, 'his' assets may be sitting in trusts which assets do not legally belong to him but over which he may still retain control. Because these assets are not his they will not form part of his estate and hence not part of the accrual should you be so married. Often the cause of the breakdown in the marriage is financial, and it happens that at divorce the wife discovers the husband terminated or cashed in the investments setup for their retirement. This leaves both parties well behind in their retirement planning.

So ladies, my advise to all of you is to plan on being single, no matter how happily married you are. We men die, suffer mid-life crisis, get retrenched, etc. Don't rely on your husband to provide for you in retirement as he is unlikely to be there to enjoy it with you. Make your own provisions, and if not already started, start today - you may just have some serious catching up to do.