In India, women have a literacy rate of roughly 70%, while men have a literacy rate of 84.7%. Women have constantly been struggling for educational opportunities, equal employment options, and equal pay in the workplace for decades, while they are making their mark in every industry. With the passage of time, improved education, and stable career possibilities, an increasing number of women are taking over as the primary breadwinner of their families and becoming economically self-sufficient.
But, women tend to lag behind men in terms of gaining financial freedom and security, and the majority of them rely on men to make financial decisions for them about their hard-earned money. Honestly, it exacerbates the economic barrier and widens the gender gap already present in society because women lag behind men in all aspects of finances, with the biggest gaps in investing and saving.
Especially, women confront varied obstacles when it comes to retirement planning. For both men and women, the math of retirement is quite similar. But, there’s an obvious catch, as women are known to live longer than men and face additional challenges due to conventional gender roles; after the age of 65, they are more likely than men to be poor. But, women are more likely to be wise long-term investors too, who, I believe, can retire comfortably with proper planning and awareness of the challenges they confront.
Challenges faced by women:
- Life Expectancy: According to statistics, a 65-year-old woman has yet another 20.7 years of life left, compared to 18.1 years for the average male. That means, regardless of age, women must save for more years of retirement than men. For example, in a married couple, there’s a good chance of the wife outliving the husband and being responsible for her health and household bills alone. The financial strain of not sharing expenses, combined with a longer life expectancy, makes it much harder to retain resources.
- The Wage Discrepancies: Indian society, as a male-dominated society, has a significant lack of women’s participation in the workforce and GDP. Studies conclude that females earn 20-29% less than their male colleagues. It is problematic because it can have a significant influence on your retirement. If your job offers a pension, you might also receive less retirement-saving assistance from your employer than your male counterpart, as it is usually calculated based on gross income. When there’s less money coming in, it can be hard to save, or save as much, for retirement.
- Contributions in Finances: In India, most women leave financial decisions to their husbands. Even if their plan prior to marriage was to be equally active in household finances, it still continues to happen the other way around. It’s tempting to believe that it only applies to previous generations, but this isn’t the case. Women may be left out of the loop about domestic debt ratios and retirement security because they have little to no visibility into day-to-day finances and long-term planning. If obliged to manage everything on their own suddenly, they will struggle to keep things rolling. In situations of crisis like financial abuse or identity theft by a spouse, getting your own apartment, automobile, or bank accounts can also become next to impossible. That’s also a reason why it’s so important to keep track of your finances.
Women’s Retirement Planning Checklist:
Take your steps now to resolve these issues and ensure a happy and healthy retirement life.
#Step1: Play an active role & be involved: Married or not, start participating in the financial decisions, and keep yourself up-to-date on your household’s financial health. You don’t have to undertake every financial activity yourself (you might be too busy or prefer other chores), but you do need to be aware of what’s going on. Maybe, try scheduling a ‘money meeting’ with your family once a month or once a quarter for discussing finances and long-term plans.
#Step2: Plan & Strategize: With a strategy in place, you can boost your financial confidence, build productive habits, and solicit feedback on crucial issues that may have slipped your mind. Ask yourself questions like when do you want or when will you be able to stop working, how much can you save each year, or if you have any obligations, etc., which should also include health care expenses and taxes. Eventually, you will have a projection of how your retirement life would look, depending on how much you save and how your investments perform. Your plan won’t be thoroughly predicting the future, but it’ll guide you to spot problems, avoid unwanted situations, and increase your chances of retiring comfortably.
#Step3: Weigh the Risks of Your Investment: Women are more likely than men to be wise long-term investors, as they are less prone to respond to fleeting market movements and make a loss. If you’re overly cautious, you can miss out on long-term progress that could help you achieve your goals, and of course, being aggressive might backfire too and result in huge losses. The best investment mix for you is driven by your needs and wants. Certainly, the best course of action is to seek professional assistance.
#Step4: Make the Most of Your Money: During your working years, growing your wealth should be your top priority. Investing in equity funds (such as ELSS or company shares) is riskier than FD’s or PPF’s, but it has a higher potential of generating more profit.
Conclusion: Financial independence and security, enable a person to continue living even in the face of financial difficulties and adversity. Today’s earnings may not guarantee financial security in the future. For a stress-free retirement, financial independence must be achieved early in one’s career and life. It can be accomplished only through prudent money management and sound financial judgments when it comes to investing and creating passive income.
Written by: Arpita Chatterjee
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