Retirement Planning For Women – How Should Women Plan At 3 Different Life Stages?  

Why should (working) women plan differently at different life stages?

Everyone goes through different life stages and financial planning needs change from one stage to another. When it comes to financial planning, the stages can generally be classified as accumulation phase and decumulation phase. For women, there is the added complexity of the need to play different roles throughout their life such as being a mother or a caregiver in addition to being a wealth accumulator or decumulator. This requires additional planning considerations to support them with the changing roles. For example, a woman may be at the peak of her career and earning a good income but has to stop work for a period to be a caregiver, which means she essentially becomes a wealth decumulator in her accumulation phase. These type of changes and challenges are not as common for men.

Identifying which life stage you are in will allow you to better know which steps you need to take, and I will be sharing on the three main life stages as follows:

Preparation Stage – Starting On Your Career

Women in this stage would be just starting out on their careers for quite a few years.  They are usually in their 20s to sometimes early 30s. With more finances and freedom in decision-making in hand, it is natural to want to spend and maybe splurge more on lifestyle needs. One way you can prevent overspending is to adopt a “pay yourself first” attitude. This means that it is prudent to put money aside into savings and investment plans first, before spending the rest.

In the larger scheme of things, if you are in this stage, you need to adopt a “Protect and Grow” approach, which focuses on protecting your health and medical needs by setting up a comprehensive insurance portfolio of hospitalisation and critical illness coverage.

The common mistake is that women in this stage tend not to think long-term and so they start their retirement planning later than they should. Planning for retirement is usually not appealing because work allows for engagement and networking, and they would rather spend on items they have been dreaming about.

In terms of financial planning priorities, these are the top three for consideration:

  1. Coverage – This is important to ensure that there is adequate coverage for hospitalisation and critical illnesses as someone starting out in their career would not have much savings should the need arise for medical treatments.
  2. Property – This is especially vital for someone who is single, as owning a property for self-use serves as an “anchor” for the future. We have a Property Affordability Assessment Service we use to take clients through a process to evaluate how ready you are to buy a property.
  3. Investing early – This will help to future-proof against retirement lack.

Pro-tip: You don’t have to be clear about your future at this stage but you should be saving consistently and also increasing in tandem with your income. The time to focus on getting more clarity is what I will be talking about in the next stage.

Clarity Stage – Defining What Is Important

Women in this stage have entered the “golden period” of retirement planning, when they now have more spare cash. That is the period when your standard of living starts to settle down and you are at the peak of your income earning. For most people, it should be sometime in their late 30s to early 40s. At this point, luxuries suddenly look a lot more affordable, and so, you start to tell yourself “If not now, then when?” when it comes to buying things. However, spending can quickly deplete any excess in disposable income, so it is prudent to have a plan that will aggressively grow your wealth through savings and investment for retirement.

Why do working women in their forties need to plan differently from her younger peers? As said earlier, usually someone in this stage is at the peak of her career and earning a good income. However, one may have to stop work for a period to be caregiver, which means she essentially has to temporarily become a wealth decumulator in the accumulation phase. Or she may stop working to give birth/raise her children. There are various financial planning priorities that may apply to you, and you can read about them in my other articles, such as how to mitigate major financial risks and what to do about caregiving risk.

Let’s take as an example, Ms Chua, who is a friend and client of mine. She is single, and an only child who is expecting to inherit her parents’ property. However, she works in the web design industry which offers her exciting growth opportunities in the short term, but one of her concerns is getting burnt out from the constant need to be creative and meet deadlines in her job.

As she is currently in her early 40s, she is thinking more seriously of her long-term financial plans and wondering how she can plan beyond basic insurance and savings plans. Considering that she is already in line to own a property gift in future, the question she is likely to ask is “What’s next?” as there doesn’t seem to be anything else tangible that she needs to aim for.

My advice to her that was that being an only child, she needs to consider the possibility of having to stop or reduce her workload earlier, in the event that she needs to become a caregiver for her parents, or just to simply take care of them. Hence, at this stage of planning, it is good for her to consider a good financial plan with more disposable income, because this will allow her to maintain her sense of security and freedom in future.

Women in this stage tend to neglect their own insurance needs. In addition, work usually takes a toll on their health and affect their eligibility for insurance coverage. Hence, it is important to look deep into their retirement needs so they can be prepared for all situations.

To define what you want during this stage, you will need to work through the three decisions:

1. Decision on Home – Where do you want to stay?
2. Decision on Assets – What do you want to own?
Decision on Work – When do you want to stop?

With these priorities in mind, you have a better road map to guide you through which steps to take next.

Retirement Stage – Living The Plan With Adjustments Along The Way (Convert Assets To Income and Planning Your Legacy)

Women in this stage are likened to a plane preparing for touchdown. You should have already defined what you want, and be adopting a “Prepare and Generate” approach, which means focusing on getting ready for retirement by rebalancing your investment and insurance portfolios to set up plans generating retirement income to eventually replace your working income. Some other areas that need attention include how to use CPF for retirement and long-term care planning such as setting up a Lasting Power of Attorney. This is the stage when women are most likely to take on caregiving responsibilities so they must be mindful not to overstretch themselves physically and financially.

In terms of financial planning priorities during this stage, these are the top three in order of importance:

1) Protection – For women in their fifties, they should start to look at insurance not for the purpose of protection for loss of work income but rather for asset protection in the event of a loss of health. One easy way to think about this is that your insurance coverage should be enough to cover medical and long-term care costs, without you having to sell any assets.

2) Income – Having lived within your means in Preparation stage and having saved and invested in Clarity stage, at this stage, you would be looking into converting your assets into income. The focus is to create enough retirement income to eventually replace your working income.

3) Legacy – Finally, you can also focus on how you envision your legacy to be, if you have the resources to make it happen.

If you are having difficulty figuring out where and how to get started, have a look at the Retirement Clarity Package I have designed that will help you review and plan if you are “retirement ready”. It will address risk management as well as wealth accumulation so that you can be on your way to being financially self-sufficient.

I hope that you managed to identify the stage that you are in and begin to recognise how prepared you are. May you take an active step towards preparation if you are not satisfied with where you are in your retirement planning!

Article by Lee Meng
Email: meng.lee@gen.com.sg

The writer is an Executive Financial Services Consultant of GEN Financial Advisory


If you want to know more about Retirement Planning for Women or any other enquiries, you may contact me through whatsapp, schedule an appointment with me or fill up the form below and I will get back to you as soon as possible.


Lee Meng 李萌
Executive Financial Services Consultant

RNF No. LMX200165625
B. Business (Banking & Finance), FChFP, AFC


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