While saving for retirement starts off as a key priority for women in their 20s, the retirement contributions they make in their 30s and beyond tend to dwindle as more money gets channelled towards starting a family and household finances.
This is according to the Scottish Widows’ latest Women and Retirement report, which found that 26% of women surveyed in their 20s believe that they are preparing adequately for retirement compared to 30% of men.
The gap widens quite significantly between men and women surveyed in their 30s, where 31% of women believe they are saving enough compared to 48% of men.
With the global average age at which women become mothers for the first time being around 30, Gulnar Muragodlu, a professor of finance and director of Queen Mary University’s Behavioural Finance Working Group, says the figures cited in the study are reflective of society’s general behaviour and attitudes towards finance and coincides with the period women begin to fall off the savings ladder.
“By nature women are more conservative and risk-averse than men, so as they are aware that they are going to be less likely to save in their thirties due to the impact of career breaks, women ensure that they are plugging this gap by ramping up saving in their twenties,” she was quoted saying in a Telegraph report.
The report also found that women with children also tend to be more anxious about their finances than men with children, with the study finding that 37% of women with dependents feel more pessimistic about their long-term financial security, compared to 26% of men.
“Women are also more realistic than men, which may explain their higher levels of pessimism about what their income expectations are for retirement,” says Muragodlu.
The retirement savings gap between men and women can be best explained by a widening global gender pay parity, while some analysts suggest that men are more prepared for retirement because they make better investments.
A 2013 World Economic Forum (WEF) Global Gender Gap report found that South African men earn around 35% more than their female counterparts in the same job.
The picture doesn’t get any rosier with WEF’s 2015 report, which suggests that women won’t achieve equal pay for another 118 years – meaning pay parity will only become a reality in 2133.
Local research has found that South African women typically outlive their male partners by seven years and since a woman’s career tends to get interrupted by factors like maternity leave and being the primary childcare provider, Sandy Govender, head of group insurance at Momentum, says women carry an even greater burden to prepare for retirement.
“Bridled to the fact that men typically earn more than women, this leaves women with an even bigger gap at retirement. For every rand saved for retirement, women will receive approximately 20% less retirement income than men due to the expectation that they will live longer,” she says.
Govender suggests the following tips to help women prepare better for retirement:
- Don’t procrastinate, start saving young. We recommend that women start saving in their 20s. Couples tend to see retirement as something far off. This procrastination will only lead to stress later in life
- Contribute to your own retirement arrangement. It’s important for women to make additional contributions via retirement arrangements as contribution guidelines are not always adequate
- Become financially independent. In this regard it’s important for women to take ownership and create safety nets for themselves by becoming financially savvy. If you are unsure about how exactly you can plan for your specific situation, chat to your financial advisor
- Retire when you are best positioned to and not necessarily when your partner does. Women might face more speed bumps than men on the road to retirement, but all it takes is long-term perspective coupled with some smart thinking