Did you know that women typically live longer than men? The difference in life expectancy is almost 4 years in the UK.
In addition, women are much more likely to live alone when they are older. Statistics show that only 18% of women age 85 or older are still married while 58% of men over age 85 still have a partner who is living.
As a result of this, women tend to spend considerably more on care in old age (according to one source I came across, they need to spend three times more).
There are some other interesting facts when it comes to women and personal finance:
- Tend to accumulate lower entitlements to state pension. [State pensions payments stop when the individual in question dies, so relying on someone else’s state pension when they have a shorter life expectancy is dangerous.]
- Often have much less saved in personal or employer pension schemes. This is particularly the case when a career has been put on hold to embark on the magical expat mystery tour.
- Employer defined benefit pension scheme payments typically reduce by 33-50% to surviving spouses on death of the member.
- Much less involved when it comes to financial planning, e.g. for retirement.
- Often less aware of how the family money is invested and how accounts are managed.
As you can imagine, a longer life expectancy combined with lower pension assets and/or little or no prior involvement in managing the family finances is inherently risky.
Here are some simple action points that can be taken to mitigate that risk.
- Even if a spouse is not working, they can (and should) make voluntary National Insurance Contributions to build up state pension entitlement. Read more here.
- Both parties should be involved with the financial planning process and management of family finances.
- If you have defined benefit pension and haven’t done so already, find out how much it will pay to a surviving spouse.
- Build a family “in case of death folder“.