Why every woman needs a retirement plan—and a retirement plan B

Many Canadians ignore future planning—including women. But we’re doing more, earning more, and even living longer. While everyone needs to plan for what’s ahead, women should take charge now.

Sometimes we only discover the importance of a financial plan after an event where you wish you were better prepared—such as after a death, disability, or divorce. No one truly understands the importance until they have to manage the outcomes of these events. I lived this experience firsthand when my cousin passed away at age 44. She was an accountant with the Canada Revenue Agency and more financially knowledgeable than most, but she never actually drafted her will and passed away without one.

My family agreed that I would step up as executor and handle her estate, but her lack of planning left me with thousands of dollars in legal bills, six months where I couldn’t access any of her money or information, a house to keep running, and the responsibility of her two minor children—with no financial plans in place to look after their needs.

These events are highly emotional and stressful, even with every detail planned. But having a will, power of attorney, and insurance can reduce the financial and emotional impact. When there are no plans in place, it adds additional stress, cost, and time, and it can put a strain on the whole family. Estate planning can often be an afterthought or something we assume only someone with lots of money needs. But the truth is, we all know it’s best to have a will in place but struggle to take action. That delay can cause a significant burden for loved ones.  

Why don’t all Canadians have a will?

Only about half of Canadians have a will, and that number is a bit lower for women. There are a number of reasons for this: You think you’re too young, don’t have enough money, or worry that the process is too expensive. Plus, when there are children involved, you need to decide on a guardian, and parents often struggle with the decision of who to appoint. But remember, your will can be changed or updated at any time. It’s important to put the plans in place based on your current wishes and adapt as needed. After dealing with the outcome of my cousin not drafting a will, I can assure you that the cost of inaction is much greater than the cost of taking action. 

The reality of retirement and estate planning for women

When discussing retirement planning with married women, it’s common to hear plans for the future as part of a couple. It’s understandable, as the majority of baby boomers married in their 20s and 30s, and many women of that generation may still look to their husbands to manage and control the finances for the household. While it’s natural that one person in the family might take the lead, it’s absolutely necessary for women of all ages to understand their financial situation.

Not only do women live longer, but more of us are also getting divorced on the cusp of retirement. The average age of divorce is now 46, an age that’s been steadily rising since the 1970s. Widows outnumber widowers more than three to one, and fewer of us are even getting married to begin with. Even if we don’t plan to retire alone, we just might do so anyway, so it’s important that we feel confident about financial literacy and take action on our financial plan.

What’s a retirement plan B?

When you work on developing a financial plan, it’s important to consider those what-if scenarios. Retirement planning is an aspirational plan A: You assume you’ll be healthy, live to life expectancy, mobile, happily married, and essentially living your best life. You also need to look at scenarios where factors aren’t so ideal, and you need a retirement plan B. What if you became disabled, incapacitated, or immobile? What if you or your spouse passes away prematurely? What if you or your spouse needs additional care at home or in a long-term care facility? Does your financial plan have enough buffer to cover these scenarios?

What every woman should do right now

Elevate your financial literacy now. Learning about your finances when dealing with a crisis can add significant pressure to an already stressful situation. Start now rather than when a crisis happens.

Take inventory

• What income do you have coming in? Understand how much money is coming into your household. How much money does your partner make? Is the income protected in any way, such as having disability or critical illness insurance? What would happen if one of you suddenly lost your job?
• What income do you have going out? What does it cost to run your household? What expenses are fixed, such as your mortgage, car payments, and utilities? What could you cut back on, if needed?
• What do you own? What assets do you have, and whose name are they in? This includes real estate, investments, pensions, and vehicles. Are you named as a beneficiary? Do you have access to every important document? 
• What do you owe? What debt do you have, and whose name is it in? This can include your mortgage, lines of credit, credit cards, and loans.

Develop and implement your plan with the help of a financial advisor. Your plan should evolve with you and your life changes and requires updates over time. This can include life events such as getting married, having children, buying a house, changing jobs, and a death in the family.

Why it can be difficult to take action

Sometimes we don’t know where to begin. Working with a financial planner is a great place to start, as they can guide you through the process and ask questions, some that you may not be thinking about or even be aware of. Not only will a financial planner help you develop a plan, but they’ll also give you the required nudges along the way to take action. Your financial planner is also a great source of expertise that can help address all your questions and concerns.

There’s no perfect time to make a plan for the future and get it down on paper, but there’s also no better time than the present. Talking about what could happen, and not just what you want to happen, is critical, and it won’t get easier if you wait. Taking control of your finances and elevating your knowledge are something every woman should do—sooner rather than later.