Women also need to plan for their retirement

 By 2050, around 25% of the population in OECD countries and 17% of the global population would be over 65 years of age, but only 24.8% of individual globally save for their old age. India is not an exception to this trend. By 2050, the number of people aged 60 and above is expected to be about 315 million.

Across the globe, mostly men undertake the task of financial management and deal with financial planning, including planning for retirement. Women’s financial planning receives very little attention.

Retirement planning refers to preparation for the time when a person would leave the workforce and work-related income would cease to exist. It is a strategy to establish a balance between current expenditure and savings to ensure a financially secured retirement. Retirement financial planning is vital for smooth transition, adjustment, and success during retirement.

Why focus on women?

Today, more women are participating in the workforce. Further, old age has specific implications for women as they often outlive men, devote less time in the workforce due to their caregiving roles, usually participate in part-time jobs/ less paid jobs or service positions which are not covered under pension plans, avail less pension benefits and lower wages due to gender differences etc. which cannot support them financially in their old age.

Financial planning for women

One should start investing from the very beginning of one’s earning career. As financial planning is a long journey, before embarking on it, everyone should purchase adequate health insurance and a suitable life insurance policy. One may be young, but ill-health and risk could happen at any point of time. Apart from adequate insurance, it is also essential to build an emergency fund which should be equal to six months of your take home salary. Once you are done with these basics, then start investing.

Suitable Financial Products

At a younger age generally, financial commitments are less and risk appetite is more. In such a scenario, one could be better off by investing in preferably equity based mutual funds through SIP. This will help in achieving long term goals such as financial security post retirement, buying a house etc. Upon reaching the second phase of the life cycle such as marriage and becoming a mother, women look for certain other products such as highly rated non-convertible bonds, debt oriented mutual funds, PPF, NPS etc.

Improving Financial Planning by women

Many empirical studies carried out in India reveal that young women are less active in retirement planning. The studies cite reasons such as lack of experience in investing, choosing among the range of financial products, depending on the spouse etc. Thus, young women should be considered a separate niche market and financial advisors should provide step by step guidance and encourage them to start financial planning early.

To conclude, the earlier culture of keeping financial discussions and responsibility for investment decision restricted to male members of the family is slowly fading away and working women should seriously do their own financial planning.

Life Insurance: Data Analytics for customized solutions

There is no denying the pandemic has been a true catalyst of transformation in every sense – economic, societal, and personal. For all the uncertainty it posed, it is clear already the future is digital. The scale and speed of digital transformation witnessed globally has proved that digital journey is not a destination, but an evolution. There are two questions that businesses should always be asking: Are customers demanding more from the business? How can you unlock higher value with a more digitally agile operating model?

The insurance industry is growing at a steady pace accelerated by a rise in awareness and subsequent demand. But this growth is also fueled by significant investments in delivering end-to-end digital customer experience, flexible products, and most importantly, radical customer obsession seeped into every single process.

Data leads to Innovation

            The evolution of experience stems from the intelligent use of data insights and analytics to inform decision-making. Access to data can help firms reach customers more efficiently. Using improved analytics skills & Artificial Intelligence (AI) based customer modeling can be developed and deployed across various customer life stages. This can help gain a thorough understanding of the customer pulse. An example of this is using data analytics with an existing customer database to create predefined personas with less documentation. Queries on life insurance policies types, personal details, work experience, and past life insurance experience can help develop potent ground to innovate and rethink the policy approaches.

Digitally harness the power of flexibility

            Insurance often faces the argument that there is relatively less scope of personalization as compared with other goods. Customers acquire their insurance, often through an agent or broker, with the products being very similar to each other. Instead of a one-size-fit-all strategy, insurers must use the digital insurance process to offer customized in insurance solutions. I believe we have change the conversation with today’s customer moving away from ‘why insurance’ to a ‘which insurance’ mindset, and one needs to address the question with on-demand, all-in-one lifestyle solutions, personalized basis usage-based telematics that offer relevant, flexible offerings.

            Specially attuned to the organic needs of the millennial customers for whom customized offerings are an absolute ask, insurers will have to become digitally adept and offer solutions that are relevant to their specific life stages and savings-cum-protection asks. Another great way to ensure that the right consumer need is addressed with the right solution is to bring creative startups into areas of play that can help with co-innovation.

Invest in more effect servicing

            Today’s consumers do not shy away from changing brand loyalties if a company doesn’t actively anticipate or address their wants. The value at stake is significant. The fundamental challenge many companies face is getting the organization moving, and moving at speed to ensure proactive improvements in redesigning customer journeys. Agility can be the key, and now every lever needs to be perfectly in place to roll out enhancements, plan for continuous rounds of improvements, always searching for better efficiency and speed.

                        In the end, remember that every interaction with the customer is a way to live up to your promise. Think of your customer experience as a continuous journey, technology as accelerators, and transformation as a fundamental opportunity.

Eight steps to walk the financial Independence path

 The greater the gap between earnings & Spending, the faster the net worth grows.

Financial Independence refers to being in possession of sufficient money to sustain the current lifestyle for an indefinite longevity. The first step towards attaining financial independence starts with assessing one’s net worth or current financial position.

To be sure, list down all your assets like bank accounts, investments, house and property, valuable & your liabilities. The difference between what you owe from what you own is your net worth.

To achieve financial independence the net worth should always grow. A financial plan having lifetime goals or short term goals will help achieve this. There are two basic principles: spend less and earn more. The greater the gap between earning and spending the faster the net worth grows.

Financial independence is misrepresented with higher income. The more we save the easier is the path to financial independence. Takeaways on financial independence:

1.      1. It is always advisable to save at least 10% of your gross income. It will always keep a buffer available.

2.     2. Keep monitoring your savings percentage periodically to investigate the short fall.

3.     3. Be aware of the avenues where money saved by you can be invested.

4.     4. Differentiate between long term and short term money requirements and save accordingly using different financial instruments.

5.     5. Take debt but understand the difference between good and bad debt. A good debt is one where assets outlive the debt like a loan for a house. Spending an exorbitant amount on vacation or dinner or clothes by taking debt and repaying it later for an extended period is not a good debt. It can be avoided.

6.     6. Invest what you save but be a balanced investor. Diversify between asset classes like real estate, equity or fixed income instruments. Real estate provides protection again inflation while fixed income securities provide capital protection. Choosing the appropriate mix provides benefits of diversification.

7.     7. Planning for retirement is always the priority. You can always take a loan to buy a house or car, but you will not get a loan to fund your retirement. Priorities retirement.

8.     8. As life transitions from college to first job to marriage, children, kids’ education to retirement, financial needs change. Reworking finances and achieving financial independence at each of these critical stages is equally important.

The journey towards financial independence starts now because the best time to start saving & investing is always right now.