Building financial independence is the key to being secure in retirement. This is especially true for women.
Financial advisor and author Helen Baker joined John on the podcast this week to discuss why independence is so important.
A frighteningly common situation among older Australian women is they’ve spent a lifetime caring for their family and building a home, while their husband took care of the finances.
Suddenly, after decades, the husband passes away or wants a divorce, leaving the wife scrambling to handle finances in a way she has never had to before.
Helen Baker, financial advisor and author of the book On Your Own Two Feet, says this is an extremely common scenario faced by many of her clients.
She joined host John Deeks on the YourLifeChoices podcast this week to stress the importance of financial independence for older women and says one of the biggest issues she sees is women seeking financial advice after their divorce is already finalised.
Ms Baker says she sees many female clients come in after the division of assets has already taken place.
“The big issue that I see is people coming in after they have already signed on the dotted line,” she says.
“The problem with that is they’ve generally made a mistake – because we often just don’t know what we don’t know. That might mean that they’ve taken full possession of some assets.
“When assets move in a divorce, they just slide across but once they’re in your own name afterwards then you’re responsible for them.
“If there’s capital gains tax (CGT) attached to the asset and no adjustment was made upfront you’re going to wear the CGT. There’s a lot of these different things that are in there, ways that you can better yourself and ways that you can avoid a mistake.”
Ms Baker highlights that this is not a small problem, and an entire generation of older women is at risk thanks to societal norms of the time.
“This is one of the big issues that we’ve got at the moment. There are 40,000 women living out of a car in Australia, which is horrific. It’s so important for women to get a handle on these things as early as possible.
“Generally, what’s happened in that generation, women have worked part time, or not at all, and the man took care of the finances.”
But she adds that if women in this age group are still working when the divorce happens or their husband passes away, then there is definitely still time to get finances back on track.
“The good thing is when women are 55 and beyond and they’re still working, there are always things that you can do to make things better,” she says.
“Because you’ve got 10, maybe 15, years of work life left. Over that period we’ve seen women buying homes and being able to pay off the mortgage.”
Whatever point in your life you’re at, Ms Baker says getting professional financial advice as soon as possible will produce the best results.
“One of the big mistakes people often make is they put their head in the sand out of fear,” she says.
“What is great now is there are more and more female financial advisors for which women feel more comfortable, so they don’t need to be fearful.
“We want to make sure that other women get as much out of what they can and stretch their money further and build as much as they can so they can just sleep at night and not be worried about financial security.”
How much do you know about your personal financial situation? Could you benefit from some professional advice? Let us know in the comments section below.
Also read: Millions in danger of being ‘unbanked’
In my professional life I was a Public Accountant and also did some Financial Planning. So, thankfully, I am proficient in looking after our finances. My husband has left most of this to me to control now but I make sure a few times a year I update him by spreadsheet of where our assets are currently invested.