Women need to save more for retirement but have less saved and are “rejecting the best chance they have of closing the gap” according to a new report. Photo: File
DURBAN - Women need to save more for retirement but have less saved and, much more alarming, are “rejecting the best chance they have of closing the gap”, according to a new report on retirement readiness in South Africa.

The first annual Retirement Reality Report (RRR) 10X Investments which was released on Sunday 30 September, highlights that women are not saving enough for retirement, in comparison to men.

The survey points to the gender pay gap in South Africa, where women are understood to earn around a quarter less than their male counterparts - a disparity which drastically decreases savings potential. 

The report shows that this considerable lack of equity is further "exacerbated by the increased likelihood that women’s careers will be interrupted during pregnancy and child-rearing".

According to the survey, more women than men have no form of retirement savings plan (43% of female respondents compared with 39% of men). "Women tend to prioritise expenditure for living costs associated with childcare and parenting over planning for retirement," the report found.

What makes this disparity more of a worry is the fact that South African women, on average, are expected to live a longer life than men. Figures from Stats SA's 2018 mid-year population estimates, “Life expectancy at birth is estimated at 61,1 years for males and 67,3 years for females”.

Even more concerning is the RRR’s conclusion that women in general “are rejecting the best chance they have of narrowing the gender gap” in retirement, by not investing their savings over time for growth.

The RRR report is based on data collected for 10X Investments by Brand Atlas consumer surveys conducted in 2017. They show that women are more likely to save but less likely to invest their savings.

36% of female respondents said they didn't save nor investe, while 37% saved cash but did not invest it. A mere 16% of women said that they invested their savings in order to strategically grow their wealth.

Sohini Castille, Head of Employees Benefits Consulting at 10X Investments said, "This effectively closes down a key avenue that women have to narrow the gap with men because investing in a well-diversified high equity portfolio is the best possible way to grow your money over the long-term". 

She added that if women aren’t investing their money for growth they will have a small chance of beating inflation and having enough money to draw a decent income after retirement.

“Saving money in a traditional bank account in this environment means your money is actually shrinking in value. In future you will be able to buy less than you would today with money you leave to languish in a low interest account,” said Castille.

The report highlights the fact that a big contributor to South Africa’s retirement crisis is a shortage of understanding of imortant concepts like inflation and the need for retirement savings to keep up with it.

10X Investments hopes that the RRR will draw attention to South Africa’s retirement saving crisis, while growing the discussion aimed at improving the retirement outcomes of South Africans. 

“Hopefully the report will inspire women to take control of their finances and ensure their money is working as hard for them as they are for it,” said Castille.