Women are more financially tuned than before and tend to make savvy investors.
 
Recent polling suggests that more Canadian women than men worry that their accumulated savings will be inadequate to support them in retirement.
 
Women have good reasons to be concerned. In addition to living longer and requiring a larger retirement nest egg, women generally earn less money and spend more time outside of the workforce, raising families or caring for elderly parents.
 
The good news is that women are more financially tuned than before and tend to make savvy investors. Despite their increased financial acumen, women must still ensure that their retirement planning needs don’t take a back seat to other priorities, such as paying off the mortgage or putting their children through university.
 
Regardless of a woman’s age or financial situation, it’s never too early or too late to start planning for retirement. Here are seven tips to help ease your retirement anxiety and gain control:
 

1. Start immediately — The sooner you put your money to work for you, the more time it has to grow. Even small amounts invested on a regular basis can add up significantly over time.
2. Maximize your annual RRSP contribution — If you have the money, this is an ideal way to benefit from additional tax savings and increased investment returns, especially if you got a late start saving for retirement.
3. Review your company pension plan — Make sure your employer pension plan meets your needs. When looking for a new job or considering an offer of employment, research the company’s pension plan benefits before signing on.
4. Avoid debt — High-interest credit card debt is sure to erode your long-term financial security. Avoid the credit trap and put the savings you would have paid on interest towards your retirement.
5. Beware of borrowing from your RRSP — You’ll pay withholding tax unless you’re borrowing under the Home Buyer’s Plan or Lifelong Learning Plan, which are tax-free. Keep in mind that tax-free RRSP borrowings must be repaid and preferably as soon as possible to retain valuable compounding time.
6. Understand risk — Women tend to invest less aggressively than men, as a defense against the short-term risk of market volatility. But investing too conservatively can hurt your portfolio’s return potential and leave you vulnerable to a more serious long-term risk: the loss of purchasing power due to inflation. A well-diversified portfolio, balanced between equities and fixed-income securities, is likely to deliver the best returns over the long term.
7. Seek professional advice — Studies show that women who work with professional advisors or planners achieve superior financial performance compared to women who invest by themselves. Choose an investment professional who takes the time to understand your individual investment needs.

 
As a woman, it’s unrealistic to depend on governments, spouses or children for financial assistance in your old age. The best guarantees for your secure retirement are the ones you create for yourself.
 
This article is courtesy of The Ethical Funds Company^TM, Canada’s leading manager of socially responsible investments.
 
 

September 17, 2008