The Advantaged Investor: Financial Planning – Considerations for Women Investors (Episode 102)

Senior Portfolio Manager Neela White returns to the podcast and joins host Chris Cooksey to discuss financial planning tips for women. A lot of financial planning applies to everyone, which we discuss, but there are important general considerations for women that should be acknowledged, including:

1. Why should financial planning be different for women?
2. What are the unique challenges for women?
3. When should saving/planning start?

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Transcript

Chris Cooksey: Hello and welcome to the Advantaged Investor, a Raymond James Ltd. podcast that provides perspective for Canadian investors who want to remain knowledgeable, informed, and focused on long term success. Today is August 19, 2024. I'm Chris Cooksey from the Raymond James Corporate Communications and Marketing Department and today Senior Portfolio Manager, Neela White returns to the podcast. Neela has visited us many times talking about issues affecting seniors and their caregivers. Those episodes are worth checking out in the archive. Welcome back to the Advantaged Investor, Neela. I hope you are doing well.

Neela White: I am, Chris, and thanks for letting me join again.

Chris Cooksey: Oh, it's always a pleasure to have you., and I'm glad to hear you're doing well. Now, today you and I are going to have a discussion about some differences for women when it comes to financial planning. Now, Neela, I imagine that there are many things in financial planning that are, shall we say, agnostic in terms of male or female, but I imagine there are also some considerations that should be noted. Is that a fair statement?

Neela White: You know what it is, and I think I want to stress that point, that it's not that financial planning between men and women has to be radically different because a goal is a goal. However, I think when we're dealing with females, because there's a bit of life incidents that that tend to affect them more. I think we just have to have that in our mind when we're thinking about our own financial well being.

Chris Cooksey: All right. Well, I think that makes total sense. And maybe we just start off with getting a little deeper into that. And why should financial planning be, as you mentioned, slightly different for women?

Neela White: Well, in my mind, I sort of categorize it as sort of four different categories of why we should look at this different and how we should look at it differently. We've read so much about longevity and aging, we know that women are still living longer than men. That’s a testament to the advancements in health care and lifestyle, and we know more. However, longer life also means that we need to finance our life for a longer period of time, which is going to require more savings, smarter investments and a well-planned strategy to ensure that we don't outlive our money. We have to look at what's the potential health care costs, potential support costs and what could our end of life trajectory look like so that's the first big pool, and then caregiving responsibilities. I mean, we're seeing a lot of this, especially post pandemic in the papers about women caregivers and how it affected them while they are working. Imagine a teeter totter. When you're younger and you may have a family, you take time off to raise your young family or children. And then as they start to get older, their need reduces, but then all of a sudden your parents needs increase. So we're taking time out of our work careers to take care of our young ones and then our older ones, which, we sort of forget. It does affect CPP. It does affect our RSP savings. It does affect what our pool eventually will look like when it's our turn of need. So that's the second one. And the third one, I think we all feel this at points in our lives, depending what's going on career, career breaks, you know, having to take time off work because of a personal emergency, a family emergency, I'm unable to accept promotions because it requires more time and I don't have that time because you the kids have soccer and mom and dad have a grocery list that needs to be filled. So I think it's looking at how does this affect our career and income disparities. We're still in a paradigm where men for equal work are receiving a bit more pay than women, in which case we have to take that into effect into account when we're thinking about what does it look like if we take time off work to support our families and have these caregiving responsibilities. And I think the last one is, how does this affect retirement savings and CPP? When we think of how much money we're putting away for retirement, obviously there's the calculation of 18 percent of earned income is the general kind of rule. But what happens when you take a year off or you have to go to work part time because of this responsibility. That means the amount you're saving has decreased and it's sort of all wrapped around this whole idea of how does caregiving. specifically affect women a little bit differently than it does men.

Chris Cooksey: Yeah, that makes sense. Now when we're looking at these unique challenges for women, and as you said, a lot of this is maybe societal pressure, or family pressure, or even obviously self pressure potentially. So maybe we just go into some of these challenges.

Neela White: You know what, I do understand the challenge of, of bringing up these concepts early. When should you start saving? Basically, I would say, as soon as you start work, you need to start saving. Because, whether it's the early on savings that you require to pay off student loans, get a car do some of the things that you want to do, or as you get older, you still need to start earlier. And I think it's being able to have that discussion with a female, with the potential of, do you think you're going to start a family? How do you think that's going to affect your career? And you know, when pretend Jane Doe, when you think of your mom and dad, are you going to be playing a role in their caregiving plan? And if you think you are, how is that going to affect you when you're starting off in your career? And I think, from a male female point of view, within caregiving, for the most part, the role tends to be a little bit different with things that can be done without taking time off work. So, let's set up bill payments. You can do that sitting right here. Let's set up a grocery delivery. You can do it right here. What you can't do from right here is taking mom and dad to the doctor, taking them to their appointments, going over and helping them make dinner, making sure they took their medication, stuff like that.

Chris Cooksey: That makes sense. Now we talked about when you should start planning or saving, the  earlier the better. I remember being on the TTC and seeing one of those ads that shows $25 a month and then in 20 years, 25 years, how big it gets. And of course, when I was young that money was earmarked for say fun rather than that. Now as I sit here north of 50, I'm like, man, maybe one less one pitcher of beer or whatever put in a balanced fund or something along those lines. So maybe just get a little more into the, the starting planning and identification of potentially some of these needs because it's really all about potentially in a lot of ways.

Neela White: And I think you know what right there you hit the nail right on the head, you know, one less latte, one less lunch out one less pitcher of beer, you know, if you made minor tweaks to your habits and it doesn't have to be radical because you know, if you cut out everything and everything starts to look like a chore and a task, it's not going to serve the purpose it's meant to. As opposed to if you make minor changes with the one less of something and redirect that money and make a conscious effort to do it. Maybe instead of doing as much eating out, cook two to three times a week. The internet is just ripe with recipes and stuff like that and it could be a great relationship building exercise. It could be a fun experience. Buy that bottle of wine and have it at home and play some music, right? It's a lot cheaper than spending the thirty forty dollars on the ten dollar bottle of wine that you can get from the liquor store, right?

Chris Cooksey: Sure. Sure Also too, like our friends, the millennials, they take a lot of guff about avocado toast and that we also have to be conscious of the fact that just giving up avocado toast isn't necessarily going to be the driver of you being able to purchase a home or whatever, because of the current circumstances, but there are ways that everyone can start off, I guess.

Neela White: You know what, it's funny that you made the comment about avocado toast. But, and I had this conversation with someone, you know, buy an avocado from the grocery and the avocado is about, let's say, a dollar or a dollar thirty. A loaf of bread is two fifty. A red onion and some spices., let's call that for like, two, three days worth, probably about $10 or less. Last time I bought avocado toast because I just had such a hankering, it was just over $12. So, when you think of little things like that, how desperately do I need it as opposed to, hey, $12 in 20 years is going to be equal to what? What is it that I'm going to need that I wish I had the compound effect of that $12 or whatever the amount is that I wish I had it now, right? And unfortunately, it does become one of these things of when we're younger, it's really hard to envision these things and empathize with, with what is our future need going to be.

Chris Cooksey: Yeah, that makes sense. And at the same time, you can't give up everything because you do have to live. I think as a professional, you would agree with this - if you are just concentrating on the future well, you're not necessarily living in the present. So what is that right balance for you?

Neela White: Well, that's interesting, because yes, I do agree, especially as I'm in my 50s now, that life and time becomes much more precious, because stuff starts to happen within, well, within any age group but ours, that you realize, yeah, you can't keep planning for then and miss out on now, because now might be what you have. But I think the right balance is when you're, when you're thinking about saving, write down your top three goals. What are your three goals? What's it going to cost? What do you need to do to get there? So that you're very conscious about. Okay, my top goal is, pretend it's a trip. Is that extra latte or that second latte in the day, does it mean more to you right now than going on that vacation and lying on the beach? And I think it's being conscious about what is it you want or what you're saving for your goal compared to your little habits right now.

Chris Cooksey: And like we started off the top, we talked about financial planning tips for women. This, as you mentioned, this is not necessarily man versus woman. This is what is your life going to look like, and if we look at the way things are now and who our primary caregivers tend to be, who tends to take the leave when it comes to children those things have to be incorporated into the plan. That's really what we're talking about in a nutshell, right? Like I don't think there's anything based on your role within society that necessarily will cause a difference because the generality of financial planning is the generality and applies to both.

Neela White: Yeah, you know what? The market is gender neutral. An investment is an investment. I think it's just how you view that and how you view your habits and your choices and just being conscious of what roles you're going to play, right? I mean, the best kept secret. It's not a gift when you find out that you're going to be a caregiver and you never planned for it and no one ever had that conversation with you. What I think we all need to emphasize is the importance of having these conversations. They may not be the most comfortable ones, but at the same time, I think we're each doing a disservice, whether we're going to be a care recipient or a caregiver. It's a bit of a disservice when you don't have this open dialogue and you make this grand assumption, that somebody can do it or wants to do it, right?

Chris Cooksey: Exactly. I think you hit the nail right on the head there. Well Neela, I want to thank you for taking the time today. I always enjoy our chats and let's do this again soon.

Neela White: Absolutely. Well, thanks for having me and have a great start to the week.

Chris Cooksey: Reach out to us at advantagedinvestorpod@raymondjames.ca. Subscribe through Apple, Spotify, or wherever you get your podcasts. Please contact your advisor with any questions you have. Thank you for taking the time to listen today. Until next time, stay well.

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