Women’s wealth is growing. That is helping women plan for their futures. But there are factors that make retirement planning different for women compared to men. Nicole Ewing, Director, Tax and Estate Planning, TD Wealth, joins Kim Parlee to talk about what women can do to take greater charge of their finances.
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[THEME MUSIC]
* If you are a woman and you are thinking about your retirement planning and the things you need to think about, you may be wondering, is it different than how men have to plan for retirement? The answer to that is yes.
- And here to tell us why is Nicole Ewing. She's Director of Tax and Estate Planning at TD Wealth. Let's talk about all the reasons why it may be different for women.
* Well, we know that women, on average, live four years longer than men. We know that women who are in relationships are more likely to be widowed earlier than men are. We know that while we are seeing increases in the amount of wealth that women have and control, there is still that gap in the pay, so there's differences that, unfortunately, persist.
- We also see that, again, in many situations, we still see women as taking the disproportionate amount of responsibility when it comes to child rearing or caring for other relatives, elderly relatives, for example.
- And so not only does that eat into the time, perhaps take you out of the workforce for a period of time, but it can also just impact the amount of mental load and the capacity that you have to take on additional thinking about your financial planning and prioritizing that for yourself.
- So there are these differences. And then I think, as well, this is the first generation-- for many of us, our parents, our moms were the first generation of women who were working outside the home full time. And so we don't have those role models, necessarily, that hopefully the future generations will have to see how retirement can be done, to see how growing that wealth can happen more effectively and efficiently.
* So we're blazing new trails here. We are pioneering on the way. OK, so how important is it, then, for women, from your perspective, to really take control of their finances, given all those challenges you just mentioned?
* 100%, it's absolutely critical. So we need financial literacy. We need to understand the environment that we're working within, and we also have to have that confidence to question the fees that we are being charged, to negotiate different investment charges that we might be seeing or to our pay, to make sure that we're challenging some of that and making sure that we're maximizing the amount of money that we are actually bringing in.
- And as well, knowing how to maximize the growth opportunities that we have with that, so getting very familiar with our financial products. Knowing about FHSAs and TFSAs and RRSPs and all of those so that you can make the money that you're earning work for you as significantly as possible.
* It's interesting, too, because just because-- and this is I think where people kind of get lost-- is you need to be financially literate. It doesn't mean you have to do everything.
* Absolutely not.
* It means you have to be able to ask the questions.
* You have to be able to ask the questions and to know who to engage. And so the one thing I think about all the time with women is protecting your financial security is as important as getting that wealth.
- So talking to advisors about how to do that might involve engaging a lawyer for a cohabitation agreement or a prenuptial agreement, working with your advisors who can help you figure out how to invest in a way that keeps you safe, in case of any of the little things that happen during life.
* What about-- you said earlier women live longer, which I think, if you live longer, you're going to need more money to help you when you're living longer.
* Well, yes. And we know that, unfortunately, there is a phrase that you're not living longer. You're dying longer. And that means for many people that the health care costs are going to be that much higher.
- And so being able to plan for that when we're thinking about our life expectancies, how do we want to be spending those final years, building those pools of wealth and allocating that so that we have those sufficient funds to be able to take care of ourselves in those circumstances.
- And knowing to not-- just because we have those funds, there might be those pressures to give some of that away, to help our children, or to help our elderly parents, but we don't want to do that in a way that's going to disadvantage us in terms of taking care of ourselves.
- Ultimately, we are responsible for ensuring our own financial security. And so being able to say no is going to be a critically important part of that.
* What about if you are a single woman? What's the difference between retiring as a couple and retiring on your own?
* I'd say there's pros and cons to this, right? So of course, without having two incomes, without having a spouse's pension to be able to rely on, your pool of funds might be less. But you also don't have other people's bad habits or different needs impacting you, so you do have the control in the situation to plan for yourself, making sure that you are doing this in a way that isn't, again, not prejudicing yourself against future opportunities.
- So figuring out what is most important to you. What are your goals as an individual? And those may change if you find yourself later on getting married or in a relationship, but making sure that you're planning as though you are going to enter retirement as a single person.
- What does that look like, and how are you going to fund that? So if you need to perhaps invest a little bit more aggressively. This is something that women do tend to be more conservative in their investments. Perhaps you need to be encouraged to take on a little bit more risk based on the fact that you are going to need to grow your funds more aggressively than having them conservatively invested would allow.
- This is all where that financial literacy really is going to play a part, helping somebody-- helping you project out what you're going to need so that you have the confidence to know I'm going to be OK if I do this. I need to set this amount of money aside. This is what I can expect things to cost me, and what do I need to say no to.
* You've got a list here. I know we want to finish up with a few things just people need to think about, I'll say now, just in terms of these things. You mentioned one thing was about risk tolerance, so just understanding that. But give me some other tips to think of.
* So thinking about parental leave, for example. Not having just one spouse take that full parental leave, but splitting that to allow both to maximize--
* Financial and life reasons for that.
* Exactly. Making use of tools like gifting spouses money to invest in their TFSAs or using spousal RRSPs to allow for that income splitting in retirement can maximize both spouses' retirement savings. Looking at the tax credits that might be available to you.
- If you are a primary caregiver, either for a spouse or dependent child who has a need based on financial-- or pardon me, on physical or mental infirmity, there are going to be credits available to use to maximize.
- So this is really looking at knowing what your options are, whether to take CPP early or OAS early. And again, I'm going to reinforce it. We do need to ensure that you're protecting yourself. Those prenuptial agreements, marriage contracts, cohabitation agreements are really going to be key to making sure that you are not divesting yourself of money that you didn't intend to.
[THEME MUSIC]
* If you are a woman and you are thinking about your retirement planning and the things you need to think about, you may be wondering, is it different than how men have to plan for retirement? The answer to that is yes.
- And here to tell us why is Nicole Ewing. She's Director of Tax and Estate Planning at TD Wealth. Let's talk about all the reasons why it may be different for women.
* Well, we know that women, on average, live four years longer than men. We know that women who are in relationships are more likely to be widowed earlier than men are. We know that while we are seeing increases in the amount of wealth that women have and control, there is still that gap in the pay, so there's differences that, unfortunately, persist.
- We also see that, again, in many situations, we still see women as taking the disproportionate amount of responsibility when it comes to child rearing or caring for other relatives, elderly relatives, for example.
- And so not only does that eat into the time, perhaps take you out of the workforce for a period of time, but it can also just impact the amount of mental load and the capacity that you have to take on additional thinking about your financial planning and prioritizing that for yourself.
- So there are these differences. And then I think, as well, this is the first generation-- for many of us, our parents, our moms were the first generation of women who were working outside the home full time. And so we don't have those role models, necessarily, that hopefully the future generations will have to see how retirement can be done, to see how growing that wealth can happen more effectively and efficiently.
* So we're blazing new trails here. We are pioneering on the way. OK, so how important is it, then, for women, from your perspective, to really take control of their finances, given all those challenges you just mentioned?
* 100%, it's absolutely critical. So we need financial literacy. We need to understand the environment that we're working within, and we also have to have that confidence to question the fees that we are being charged, to negotiate different investment charges that we might be seeing or to our pay, to make sure that we're challenging some of that and making sure that we're maximizing the amount of money that we are actually bringing in.
- And as well, knowing how to maximize the growth opportunities that we have with that, so getting very familiar with our financial products. Knowing about FHSAs and TFSAs and RRSPs and all of those so that you can make the money that you're earning work for you as significantly as possible.
* It's interesting, too, because just because-- and this is I think where people kind of get lost-- is you need to be financially literate. It doesn't mean you have to do everything.
* Absolutely not.
* It means you have to be able to ask the questions.
* You have to be able to ask the questions and to know who to engage. And so the one thing I think about all the time with women is protecting your financial security is as important as getting that wealth.
- So talking to advisors about how to do that might involve engaging a lawyer for a cohabitation agreement or a prenuptial agreement, working with your advisors who can help you figure out how to invest in a way that keeps you safe, in case of any of the little things that happen during life.
* What about-- you said earlier women live longer, which I think, if you live longer, you're going to need more money to help you when you're living longer.
* Well, yes. And we know that, unfortunately, there is a phrase that you're not living longer. You're dying longer. And that means for many people that the health care costs are going to be that much higher.
- And so being able to plan for that when we're thinking about our life expectancies, how do we want to be spending those final years, building those pools of wealth and allocating that so that we have those sufficient funds to be able to take care of ourselves in those circumstances.
- And knowing to not-- just because we have those funds, there might be those pressures to give some of that away, to help our children, or to help our elderly parents, but we don't want to do that in a way that's going to disadvantage us in terms of taking care of ourselves.
- Ultimately, we are responsible for ensuring our own financial security. And so being able to say no is going to be a critically important part of that.
* What about if you are a single woman? What's the difference between retiring as a couple and retiring on your own?
* I'd say there's pros and cons to this, right? So of course, without having two incomes, without having a spouse's pension to be able to rely on, your pool of funds might be less. But you also don't have other people's bad habits or different needs impacting you, so you do have the control in the situation to plan for yourself, making sure that you are doing this in a way that isn't, again, not prejudicing yourself against future opportunities.
- So figuring out what is most important to you. What are your goals as an individual? And those may change if you find yourself later on getting married or in a relationship, but making sure that you're planning as though you are going to enter retirement as a single person.
- What does that look like, and how are you going to fund that? So if you need to perhaps invest a little bit more aggressively. This is something that women do tend to be more conservative in their investments. Perhaps you need to be encouraged to take on a little bit more risk based on the fact that you are going to need to grow your funds more aggressively than having them conservatively invested would allow.
- This is all where that financial literacy really is going to play a part, helping somebody-- helping you project out what you're going to need so that you have the confidence to know I'm going to be OK if I do this. I need to set this amount of money aside. This is what I can expect things to cost me, and what do I need to say no to.
* You've got a list here. I know we want to finish up with a few things just people need to think about, I'll say now, just in terms of these things. You mentioned one thing was about risk tolerance, so just understanding that. But give me some other tips to think of.
* So thinking about parental leave, for example. Not having just one spouse take that full parental leave, but splitting that to allow both to maximize--
* Financial and life reasons for that.
* Exactly. Making use of tools like gifting spouses money to invest in their TFSAs or using spousal RRSPs to allow for that income splitting in retirement can maximize both spouses' retirement savings. Looking at the tax credits that might be available to you.
- If you are a primary caregiver, either for a spouse or dependent child who has a need based on financial-- or pardon me, on physical or mental infirmity, there are going to be credits available to use to maximize.
- So this is really looking at knowing what your options are, whether to take CPP early or OAS early. And again, I'm going to reinforce it. We do need to ensure that you're protecting yourself. Those prenuptial agreements, marriage contracts, cohabitation agreements are really going to be key to making sure that you are not divesting yourself of money that you didn't intend to.
[THEME MUSIC]