Why Women Need to Build Their Retirement Funds

According to Statistics, most women live five years longer than men do. That’s why most financial experts advise women to save more money for their retirement to last them for five or more years longer.

The Gender Pay Gap

According to financial experts, most women like to spend more time in doing more activities, hobbies, passion, and leisure than their male counterparts. This enables them to spend more money during their retirement days. Thus, they need building more savings than men to accumulate their retirement funds. Aside from that, it’s also important for women to protect themselves financially, according to financial advisers.

RisCura investment research analyst Fran Troskie emphasizes that women should realize they need to build their retirement funds earlier than men to support their lives when they retire.

Troskie also encourages women to start looking for a financial adviser to help them build their retirement funds and investments as early as they can, especially since most women earn less than men do in SA.

Troskie’s sentiments also echoed when the Pulse of the People website published their report last 2017. According to the report, most women in SA earn 27% less than how much men can earn. This pay gap in gender is even wider for high-income workers, where men can earn up to 39% more than women of the same level or position.

Women’s Depleting Retirement Funds

Aside from that, the child-rearing activities most women have to undergo when they build a family can deplete their life savings. Another study shows that female unemployment rates are higher at 40% due to them taking most of the household responsibilities and taking care of children and family.

Troskie also adds the time women take for maternity leave caused a huge blow on their retirement funds. Troskie provided an example below how women’s retirement funds are in danger if they don’t do anything about it.

If an average woman has two children between the ages of 28-32, they take four months of maternity leave during their 40-year working life. This lessens her ability to purchase an annuity the moment she reaches the retirement age of 65. Furthermore, her retirement income may be further reduced by 3% if she only contributes 15% of her salary for her retirement funds. This means that a retired woman supposed to have an R10,000/month pension will only have R9,700.

While it may take a while for the numbers to change, Troskie said ensuring women to get adequate fundings and savings for female retirees became most policymaker’s priority nowadays.

Retirement Saving Tips for Women

The good news is it’s not yet too late to start building your retirement funds according to Troskie. She provided some tips on how women can boost their retirement savings.

Start Saving Early

Whether you just landed a new job or you’re a seasoned worker, it’s crucial for women to start investing especially if they’re still single. The freedom they have enables them to save more money for their retirement before they enter into relationships or commitments. Troskie recommends women to avail insurance to protect themselves and their money in case of emergency before they go to investments.

Avoid Cash Outs.

According to her, these little cash outs will dampen your retirement fund’s growth. So unless it’s an emergency and you really need a money, avoid cashing out your retirement funds at all costs.

Do Not Retire Early.

Unless you’re physically incapacitated to work, continue working before you reach the age of retirement. Do be untempted to retire earlier than necessary just because your spouse has retired early. Remember that you’re building your retirement funds and you’re entitled to live a leisure life too. So do as much as you can to build your funds.

Increase Your Savings

Troskie also recommends you up your savings contribution up to 20% of your income. This might mean less take-home pay for women, but Troskie emphasizes these little sacrifices can help your money to grow exponentially as you build your retirement funds. You’ll be surprised how much your money can grow as you take advantage of the compounding interest.