Arming women with $ sense

They are more prone to certain medical conditions and tend to live longer than men

Women may have come a long way in education, sports and the ability to earn more, but financial experts say there is room for improvement in their money management. PHOTO: ST FILE

Women's International Day, celebrated on Wednesday, was a timely reminder of the need for women to focus on their financial planning.

Women may have come a long way in education, sports and the ability to earn more, but financial experts say there is room for improvement in their money management.


Studies show there is still a significant pay gap, with women earning less than men. Women are also more likely than men to be employed in temporary work. This has an impact on women's choices in life and the extent to which they are prepared for retirement.

A recent report - Women's Risks In Life - by the Chartered Insurance Institute (CII), which focuses on women in Britain, showed that women are outperforming men in education and that both genders aged 22 to 29 earn the same. But a pay gap opens up later on with women in their 40s working full-time earning 12 per cent less than men.


Women may save more of their disposable income than men, but they also tend to invest less of it.

A recent study by AIA Singapore found that women allocated about 41 per cent of their financial portfolio to savings, compared with 35 per cent by men. It also showed that men allocated 32 per cent of their portfolio to somewhat riskier equities, compared with 25 per cent by women.

Mr Brandon Lam, Singapore head of financial planning group at DBS Bank, said that a higher proportion of women's assets are usually held in cash or low-yield savings deposit accounts than in investments.

"Women also generally set aside less for their retirement funds than men. The average Singaporean woman typically has less CPF savings... A smaller retirement fund coupled with a longer life expectancy for women further emphasises the need for women to focus on financial planning," said Mr Lam.


In recent years, the divorce rate has increased. According to the Department of Statistics, figures showed that there were 7,522 divorces and annulments here, up by 2.9 per cent from 2014 and the third-highest annual figure on record.

The CII report states that divorce and separation pose significant financial risks for many women, particularly later in life and when they have less of an opportunity to build up savings independently. While both genders have similar levels of savings while in relationships, women are left with far less savings when relationships break down.


Studies show that women generally have longer lifespans, longer periods of ill health in later life, and a greater need for care. However, many women are ill-prepared.

The CII report showed that women in Britain can expect to face 19 years of ill health typically - from age 64 till 83 - three years more than men. They will typically need help to carry out basic tasks for nearly three years, compared with 1½ years for men.

Mr Lam noted that in Singapore, women live an average of 4½years longer than men.


Women are more prone to certain medical conditions such as musculo-skeletal problems, and some critical illnesses, so they may require additional insurance coverage.

"Insurance planning for women should be tailored with additional coverage for female-related cancers, such as breast/cervical cancer and/or pregnancy complications," said Mr Lam.

Besides critical illness cover, some insurers have introduced early-stage critical illness plans in recent years. Ms Coreen Kwan, head of retail banking at CIMB Bank Singapore, said women should also cater for long-term care as their longer life expectancy means they often outlive their spouses.


Mr Lam advises women to set aside a larger amount for their retirement fund as they have longer life expectancy which points to higher expenditure levels.

"For the same standard of retirement lifestyle, women invest a lower proportion of their assets and have allocated lesser funds towards their retirement. This may further compound the pertinent need for women to take charge and action on their financials," he said.

6 financial planning tips for women


Dr Zhang Weina, a senior lecturer at the National University of Singapore Business School's department of finance, said women need to start financial planning as soon as possible.

The reasons are compelling: the rising cost of living, the risk of being unemployed, the need to move in and out of the labour market depending on family demands, and constant financial demands from the household. "It is never too late to start, but it will be too late if one does not start," she said.


Ms Evelyn Goh, deputy chief executive officer and chief advisory officer at Providend, said it is not how much we earn but how much we save that matters more. So set a savings target and transfer it to a savings and investment account once you receive your salary.

Begin by tracking your expenses and see if these can be reduced by exploring low-cost options. Set limits for your variable expenses such as food, entertainment and shopping.

"To get the most for your buck, use term or hybrid (whole-life packed with a large-term plan) plans for insurance coverage and low-cost index funds or exchange-traded funds for investments," said Ms Goh.


Women should be aware and avoid behavioural and emotional biases while they save, spend or invest, said Dr Zhang.

One possible bias is performing mental accounting, where women tend to mentally separate their money into accounts, and miss good investment opportunities.

"It is prudent to spend within their means instead of regretting after impulse purchases. A clear financial plan will help women to stay on track while saving or spending. Seeking advice from professionals and consulting other family members may help women to avoid common behavioural biases while making financial decisions," said Dr Zhang.

It is also important to stay away from over-promising investment plans and emotional appeals without doing due diligence on the investment options.


Sufficient hospitalisation and critical illness coverage should form the core foundation of a woman's protection portfolio, said Mr Brandon Lam, Singapore head of financial planning group at DBS Bank.

Women may consider having additional health insurance coverage as they are more susceptible to certain illnesses, breast/cervical cancers and/or pregnancy complications.

Ms Vivianna Low, head of retail financial services at NTUC Income, said there is a wide suite of insurance products to meet women's evolving protection needs at different ages. For instance, if you are looking to start a family, you can explore purchasing Maternity 360, which provides comprehensive coverage for both the mother and child.

As women tend to outlive men, there should be emphasis on having coverage for long-term disability and long-term care. This is vital as women are far less likely to have a partner to care for them in old age.

Ms Coreen Kwan, head of retail banking at CIMB Bank Singapore, said: "With higher life expectancy comes the need for more assisted living services. Insurance plans such as ElderShield help to address this, but women should also consider enhancing their ElderShield plans, which offer a higher monthly benefit and guaranteed lifetime payout, after the basic ElderShield benefits have been exhausted."

Long-term care insurance plans include MyCare and MyCare Plus by Aviva, ElderShield ValuePlus by Great Eastern Life, and PrimeShield offered by NTUC Income.


Ms Goh notes that our Central Provident Fund (CPF) Special Account attracts up to 5 per cent of risk-free returns per year. "If you are a homemaker and have income of less than $4,000 per year, your husband will also enjoy tax relief on the top-up amount - subject to applicable limits," said Ms Goh.

Last year, the CPF Board made it easier for members to transfer CPF savings to their spouses' accounts, and about 2,700 members made transfers. This is how it works - after setting aside your Basic Retirement Sum, which is $83,000, you can transfer your CPF to your spouse's CPF so that he/she can also enjoy monthly payouts for life.


Financial experts' advice to women is to take charge of their own financial well-being instead of depending on their spouses and families.

Ms Chung Shaw Bee, head of wealth management, regional and Singapore, at United Overseas Bank, suggests that a good starting point is to increase your capacity to invest.

"That means having the core competencies and capabilities to generate recurring earnings, usually through a career or business. In seeking the best investment, don't lose sight of the fact that you are your most valuable asset and your value can appreciate over time. Acquire knowledge, skills and experience," said Ms Chung.

Ms Goh said: "Women, being more nurturing and protective, tend to focus more on the security aspects, for example, the housing and physiological needs of the family, at the expense of growing their savings through sound investments."

She added: "Lack of knowledge of how markets work and fear have also held us back. Invest in yourself by signing up for financial literacy courses and learn the fundamentals of investments."

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A version of this article appeared in the print edition of The Sunday Times on March 12, 2017, with the headline Arming women with $ sense. Subscribe