6 Ways Longevity Impacts Women: A Guide to Financial Wellbeing

Canadian women are living longer lives than ever before—that’s more time for travel, enjoying time with loved ones and so much more. However, these longevity gains mean that for many women, their senior years look a lot different than they used to—and that requires new and more proactive ways of thinking about financial planning. According to Statistics Canada, right now the current life expectancy for a woman turning 65 today is age 86, that’s three years more than men. And while there’s much to look forward to, enjoying those golden years means understanding how longevity increases are changing what those later years look like—so you can plan for your future needs now.

The Single Life: Phase Two

As life expectancy continues to rise, many women find themselves facing the reality of outliving their partners. This isn’t just a hypothetical scenario. For some, it’s a daunting life chapter they may have to navigate.

If you aren't currently involved in directing your household finances, there might come a time when you have to. As longevity increases, so does the likelihood of managing your own finances for an extended period. It's essential to be prepared for the possibility of managing your finances independently, regardless of current arrangements.

“Taking on new responsibilities during major life changes can be stressful," says Julie Cowan, managing director, total wealth planning and insurance at Scotia Wealth Management. 

"The best way to build a sense of financial confidence and preparedness is by being actively involved in all aspects of your household finances as early as possible—whether that is budgeting, savings and investing or managing tax-efficient income sources in retirement. Being involved can help minimize the stress of transitioning to a single-person household in the event of a loss of a spouse.” 

Embracing Your New Chapter 

Adjusting to the next phase of your life isn’t an exclusive experience. With retirement likely to last several decades for many Canadian women, the senior years bring on new chapters—and planning for each is the key to ensuring your needs will be comfortably met during each. 

“When it comes to defining purpose in retirement, it’s important to have a clear vision,” Cowan says. That means thinking about what you’d like your life to look like in each of your retirement eras, and planning accordingly. For each phase, think about what you’d like to do and what you’ll need to make it happen, and then work with a trusted, professional wealth advisor to create a financial strategy tailored to you. 

That might even start with a longer transition to retirement. A so-called “victory lap retirement” is a gentler transition to retired life—your “semi-retirement” era, if you will. That might look like a period of part-time work in which you can continue to add to your retirement savings and pursue your passions, while taking more time for personal enrichment—volunteering, travel or other activities. 

Compound Math Hits Harder

In today’s world, retirement planning revolves around the concept of compounding: the longer you invest, the more time your investments have to grow, allowing you to reinvest earnings to generate even more income. However, certain factors can impact this equation differently for women.

What’s more, disabilities in older women can significantly impact retirement planning, and nearly half of individuals over 75 years old report having a disability. This underscores the importance of planning for potential health care costs in retirement.

In a Scotiabank report titled Rethinking Retirement in an Age of Longevity, Rebekah Young,  vice-president and head of inclusion and resilience economics at Scotiabank, adds, “The oft-cited million-dollar watermark for retirement at the age of 65 could easily be double under a range of plausible scenarios.”

A strategic and purpose-driven financial plan can make compounding work in your favour—and the earlier you start saving, the more comfortable your next life chapter will be.

Health is Wealth

Unfortunately, the new longevity doesn’t always come hand-in-hand with great health. “Although men’s mortality rate exceeds that of women at all ages, women tend to report worse health,” Cowan notes. 

Taking care of yourself physically now can certainly help reduce risks, but it’s also important to plan for your future health care needs. Whether it’s modifying your home to make it more accessible or ensuring you have funds for live-in care, your wealth advisor can help you determine your future needs and identify the most appropriate financial and insurance products to cover increased health care costs.

You’ll Have More Time to Create a Lasting Legacy

Whether it’s a business built from the ground up, caring for the next generation, or supporting causes or charities, many women care about leaving their mark. “Women often place greater importance on leaving a legacy and wanting to ensure the next generation will be supported,” says Cowan. 

Whatever your goal, it’s important to have a plan for making it happen. For example, if your legacy is your business, it’s imperative to plan for who will take over and what the transition will look like. “Women sole proprietors are the fastest-growing segment of the Canadian small business landscape,” says Cowan. 

“Only one in ten business owners [nine per cent] have a formal business succession plan in place,” says Luzita Kennedy, managing director of advanced planning at Scotia Wealth Management. “If your goal is to leave behind money—to loved ones or a special cause—you’ll want to make sure you account for that in your planning too.”

Kennedy also adds that finding the right successor or buyer can be challenging. “Mentoring prospective candidates is one way to determine who might have the right interests and skills, and can ensure the next leader possesses the institutional knowledge to carry on your dreams.”

The Power of Community

There’s nothing like having people in your corner, especially at a time when loneliness is a global health issue, according to the advocacy brief, Social Isolation and Loneliness Among Older People by the World Health Organization. What’s more, the need for community only grows as you get older: senior Canadian women are more likely than men to report feeling lonely, and from daily needs to health care, people tend to become more reliant on help from others as they age. 

From relationships with friends and family to getting the right wealth advisor and other specialists in your corner, building a community is another investment that pays off in dividends later.

To learn more about Total Wealth Planning in the age of longevity, click here.