Women & wealth: Striving for financial freedom
When life deals you a challenge like divorce or widowhood, it’s normal to feel worried and emotionally drained. If you haven’t been involved in the household finances before this point, determining financial obligations, assets, investments and debt can be overwhelming—especially at such a sensitive time. That’s why it’s important to actively participate in financial discussions and decisions early on, even if it seems easier to take a back seat given all your other responsibilities.
Let’s look at Tracy’s situation*. At age 54, she found herself alone when her husband suddenly passed away. She had an idea about their assets and liabilities, and how their investments were set up to fund retirement; but no specific details as she had dedicated her time to raising their kids and hadn’t paid much attention to financial matters. So how could Tracy have changed the narrative?
Build financial confidence
“Not knowing where to start is a common obstacle we hear,” says Lana Robinson, Executive Director, CIBC Wealth Strategies Group.
Nearly half of Canadian women admit they lack confidence when it comes to investing1. “Whether you’re facing a difficult life event, or you’re used to your partner managing the finances, you need to have the confidence to take that first step to improve your knowledge,” Robinson says. Knowledge is critical in taking control of your financial situation. Being involved now means that if the unexpected happens, you’ll feel more confident that you’re able to handle it financially.
Don’t delay having important conversations with partners or family. “Having only one partner responsible for the long-term family finances may not capture the priorities of both partners or the needs of the family,” notes Robinson.
Consider attending seminars tailored to women on topics such as investing, retirement planning, budgeting and more. There are also great webcasts, podcasts, online resources, and books you can turn to.
Prepare for the long term
In their lifetime, women face two potential realities: high rates of divorce (around one-third of all marriages will end in divorce2), and outliving men by 5.6 years3. These trends leave many women suddenly single and solely responsible for their financial well-being for perhaps the first time in their lives.
Creating a financial plan is critical to preparing for the long term. Also remember that your plan isn’t something you set and then forget. Life isn’t static, so the plan must evolve with you and reflect your life’s milestones. “Review it annually or when a major event occurs,” Robinson advises.
“Women also need to create a plan that takes into account their longer life span and the rising costs of healthcare,” Robinson says. For instance, family savings may be depleted by a partner who requires extended medical care first.
Don’t neglect estate planning
When you’re thinking about your financial security, don’t forget about estate planning.
“You may think that because you don’t have a partner or kids, you don’t need an estate plan. That’s not the case,” notes Robinson. An estate plan sets out your intention for your assets if you’re no longer mentally capable or when you’re no longer around. “Everyone should have a will as well as a power of attorney (POA) for property and a POA for personal care. In the event of a separation and divorce, your will, POAs and all beneficiary designations for life insurance, RRSP/RRIF, TFSA and pensions should be updated,” says Robinson.
“Often this conversation is put on the shelf, because it’s not seen as an immediate concern,” Robinson says. “But the sooner you have these conversations, the more at peace you’ll feel because your wishes will be documented.”
Having financial knowledge about assets, investing, debt and estate planning offers a sense of empowerment that women can rely on in situations that leave them standing solo. It’s never too late to start. If you or anyone you know is currently facing a major life event, connect with us. We’re always here to help.
*For illustration purposes only.
1 CIBC Women & Financial Sacrifices Poll, 2019
2 Money shouldn't be a taboo topic but most new couples avoid having the talk: CIBC Poll
3 The Changing Landscape of Women’s Wealth by Benjamin Tal and Katherine Judge
Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.