A special reminder to women to consider the “what ifs”

Making sure you are financially secure means testing what will happen if certain events occur in the future.

Planning for the what ifs – what if I die or become disabled - is important for breadwinners.

A breadwinner’s partner – even the stay-at-home mother - however, should equally be aware of what will happen if the partner dies, what if she is single in retirement and if she becomes disabled.

Single mothers make up 15% of working South Africans, the latest Old Mutual Savings and Investment Monitor shows.

Close to half of these women get no support from their children’s father making it critical for them as the sole breadwinner to plan for what ifs.

Prioritise yourself

Protecting yourself from these potential what ifs may be harder for women who, on average, earn 35% less than men.

However, the key to one day being a “wealthy aunty” is to realise that nobody is coming to save you, Babalwa Nonkenge, investment specialist advisor at 20Five Wealth, told a woman’s month event hosted by Ninety One.

You have to prioritise yourself ahead of your family as your ability to make a difference to those around you depends on you being empowered, she said.

Married women should also prioritise their own welfare, even if their spouse takes care of them financially.

You should embrace the best outcome, but plan for the worst, Janet Hugo, an independent financial adviser from Sterling Wealth, told women at an event hosted by Sterling Wealth and Allan Gray.

If finances are not your forte, don’t be ashamed, just find the right expert to help you, Nonkenge says. 

What if … I am unable to work or what if I die?

The risk of not being able to work is high for women from an early age. However, women are not as well-insured as men, Discovery Life executives pointed out at the Discovery event.

Fourteen percent of all women and girls around the world are disabled and once disabled, their chances of finding work again are half that of men, global statistics show.

What is quite scary is that Discovery’s statistics show that women under 30 are 1.6 times more likely to claim for cancer than men under 30, Discovery Life research and market analytics senior manager, Kashmeera Kanji, said.

Breast cancer is the dominant one and globally this cancer has a 30% relapse rate, she said.

Despite the fact that men outnumber women in the workforce, 44% of Discovery’s income protection claims for people at the peak of their careers, between the ages of 41 and 50, were for women, Kanji said.

Discovery’s statistics also show that between the ages of 51 and 60, 35% of women who are claiming on income protection cover policies are receiving payments because they have a permanent disability.

Cancer and cardiovascular disease are the leading causes of death for women, she added.

LIFE INSURANCE MATTERS FOR WOMEN OF ALL AGES
Age <30	A cancer claim is 1.6 times more likely for women
Age 31 - 40	42% of severe illness claims were for cancer
Age 41 -50	44% of all income protection claims were for women
Age 51 - 60	35% of all income protection claimants were receiving payments for permanent disabilities
Age > 60	Cancer was the major cause of death
	Source: Discovery Life

Women have less insurance

The Association for Savings and Investment South Africa’s 2022 insurance gap study showed that South African women only have 40% of the death cover and 45% of the disability benefits they need.

This means in the event of death, their families would have to do with 60% less support than they used to get from their mothers, wives and other women who keep the household running, Discovery says. Read more: It’s a real risk to have a large gap in your life cover.

This concerning statistic is, however, understated as the insurance gap analysis does not account for all the unpaid care work that women perform – it is not quantified, Discovery Life deputy CEO, Gareth Friedlander, says.

Death or disability before retirement

If you are in a relationship and rely on your spouse’s income - fully or partially - for your household and your children, your “what if …” plans should include those for your partner dying or being unable to work. Read more: How can you secure a stay-at-home parent financially?

In addition to checking if your partner has life and disability cover, make sure both you and your spouse have a will, Harry Joffe, the head of legal at Discovery Life, says. Read more: Why is it important to make a will?

He said he recently dealt with the estate of a man who died without a will, resulting in the Intestate Succession Act being applied. In terms of this law, the man’s house was allocated 50-50 to his wife and only child. Read more: Who will inherit if I die without a will?

The child was, however, only five years old, which meant that the mother would be unable to sell the house without getting permission from a court, Joffe said. Without an expensive court application, she would have to wait until the child turned 18 and was able to agree to the sale, he said.

Joffe said it is particularly important for single mothers to have a will that names a guardian for the child/children and sets up a testamentary trust for them. Failing to do so could result in their former partners being made a guardian and managing the money. Alternatively, a court may appoint a guardian and put the money in the Guardian’s Fund as minor children cannot inherit cash.

Married woman should also check how the way in which they are married - in community of property, out of community or out of community with accrual - will impact her should her spouse die, Joffe said. Many women do not know and the outcome may be unexpected, he added. Read more: Do you understand the ins and outs of your marriage contract?

A married woman should have her own will and do estate planning, especially as many women will outlive their spouses and inherit their estate. This could result in estate duty on her death, Joffe says.

What if we get divorced or I outlive you in retirement?

One in four marriages in South Africa ends in divorce before the 10^th wedding anniversary. The parent who sacrifices a career to care for children is typically worse off after a divorce.

Hugo said as you enter a relationship - when it is solid and good - have an open and honest discussion with your life partner.

“You are starting a path together that is financially interwoven. You need to have a strategy that incorporates the fact that you will both be retired at some point. You need to save enough for both of you, not just for him, to go into retirement,” she said.

As many women outlive men, those who continue their own retirement savings can ensure that when they are 75, they don’t have to ask their children for help, Hugo said.

Taking responsibility for your financial situation is at best the most loving thing you, as a woman, can do with your partner, she said. At worst, you are looking after your future self who is most likely going to spend at least a few years alone.