Within the complex web of existence, there comes a chapter that many look forward to with a mixture of anticipation and trepidation: retirement.
As the years unfold and people navigate the journey of aging, it becomes increasingly evident that retirement planning is not merely a financial consideration, but a holistic approach to ensuring a future of confidence and security.
Farzana Botha, segment manager at Sanlam Risk and Savings, has warned that the path to retirement holds distinct complexities for women, necessitating a profound comprehension of longevity literacy.
This concept, she explains, is pivotal for empowering women to shape their retirement with control and foresight. In many cases, according to Botha, women find themselves unable to retire as early or as comfortably as their male counterparts, a reality that urgently demands a change in thinking.
Central to the gender pension gap are a myriad of factors, several of which are outlined in a recent Sanlam study as well as the 2022 Women’s Report. These factors, articulated by Botha, paint a vivid picture of the intricate challenges that contribute to the disparity in retirement preparedness between genders.
Botha said: “A multitude of factors contribute to the gender pension gap, including the facts that women typically live about five years longer than men, but earn 82% of what their male peers make, for equivalent work. Closing this pay gap will take close to 300 years. Women must be empowered to control what they can. This includes stretching their retirement incomes for longer and preparing for higher healthcare costs. Longevity literacy is key to this.”
Key contributors, as identified by Botha, encompass a significant imbalance in employment, with almost half of women of working age being unemployed, in contrast to a 26% unemployment rate for men. Botha highlighted the prevalence of part-time employment among women (59%), resulting in reduced earnings.
Furthermore, Botha emphasised that inequality is exacerbated by unequal distribution of unpaid care giving responsibilities. Women dedicate 13.3% of their non-working time to care-giving, while men only spend 6.6% on similar tasks. The undervaluation of care-giving roles exacerbates this disparity.
The issue of pay parity is another critical challenge. Botha said South Africa ranked poorly in pay parity, standing “at 111th place out of 146 countries”.
Global trends reveal that women experience a 39% reduction in earnings due to care-giving breaks. Insufficient access to childcare has a detrimental effect on women’s ability to save for retirement. Botha also noted that lower levels of financial literacy among women influence their decision-making progress.
She further highlighted the gender bias in pension fund contributions, with men enjoying a larger share (51% vs 46%). Interestingly, the gender pay gap widens among individuals with higher education qualifications.
The impact of the gender pay gap is particularly pronounced in female-headed households, which constitute over 40% of households in South Africa. The absence of paternal income further perpetuates this disparity, negatively affecting financial stability.
Global data reveals that women tend to contribute 30% less to their retirement accounts due to these factors. Botha underscored the urgency of this issue, citing a recent Sanlam survey in which 48% of women admitted to potentially falling short of their retirement savings goals. A concerning 26% of women feel compelled to work until they are physically unable.
Three tips for women to consider for retirement planning
Educate yourself: Dedicate some of your time to grasp the concepts of retirement planning, investment alternatives and financial principles. Empower yourself with knowledge.
Start early and save consistently: Initiate your retirement savings journey as early as you can. Even minor contributions can grow significantly through compounding over the years.
Plan for longevity: Given that women typically have longer lifespans than men, it is important to prepare for an extended retirement period.
Make projections for your life expectancy and account for healthcare expenses.
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa.
