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A look into why women struggle to retire as early or as securely as men

With women typically living longer but earning less than men, retirement can be a challenge. Picture: Towfiqu barbhuiya /Unsplash

With women typically living longer but earning less than men, retirement can be a challenge. Picture: Towfiqu barbhuiya /Unsplash

Published Aug 21, 2023


In South Africa, ensuring longevity literacy – understanding how long we're likely to live – is crucial to empowering women and giving them confidence and financial security during their wind-down years.

The country has a substantial gender pension gap of 26%, highlighting the average difference in retirement income between men and women.

Farzana Botha, segment manager at Sanlam Risk and Savings, says women often find themselves unable to retire as early or as comfortably as men do. She believes that reversing this trend should be a national imperative.

Elaborating on the factors contributing to the gender pension gap, Botha says: “Multiple factors come into play, including the fact that women typically live around five years longer than men but earn only 82% of what their male counterparts make for equivalent work.

“Closing the pay gap would take nearly 300 years. Women need to be empowered to take control of what they can, including stretching their retirement incomes and preparing for higher health-care expenses. Longevity literacy is the key to making this happen.”

A recent study conducted by Sanlam reveals that, like men, women aspire to retire comfortably at the age of 65. Botha stresses the need to redefine retirement, aiming for a more personal, flexible, and unconventional approach.

The wind-down years present incredible opportunities for women to explore new careers, travel, pursue passion projects, spend quality time with loved ones, and make a lasting impact on their communities.

Remarkably, 33% of surveyed women view retirement as a chance to embark on a second, gentler career. This is precisely the focus that needs to be reinforced to empower women.

Simultaneously, providing concrete roadmaps to achieve the necessary financial freedom to attain these goals is vital.

Botha highlights nine contributing factors to the global gender pension gap, as outlined in the 2022 Women’s Report and other sources:

1. Employment Disparity: Men are more likely to be employed than women, with close to half of all working-age women in South Africa being unemployed compared to 26% of men.

2. Part-time Work: Women are more likely to work part-time, resulting in lower earnings compared to full-time employees. Approximately 59% of part-time employees are women.

3. Care Responsibilities: Women continue to shoulder a greater burden of care activities during non-working hours, with 13.3% compared to men's 6.6%. This care work is unpaid and often undervalued.

4. Pay Parity: South Africa ranks 111th out of 146 countries in terms of pay parity. Globally, women who take a year off for caregiving earn 39% less than those who do not, and fathers have a higher rate of workforce participation than mothers.

5. Lack of Affordable Childcare: The lack of accessible and affordable childcare options is a significant barrier for women worldwide, impacting their ability to contribute to retirement accounts.

6. Financial Literacy: Women often have lower levels of financial literacy, which can impact their decision-making regarding retirement planning.

7. Employer Contributions: 51% of men have their employers contributing to their pension funds, while only 46% of women receive the same benefit.

8. Education Gap: Surprisingly, the pay gap between men and women widens with higher levels of education. Globally, women with a Bachelor’s degree earn 74 cents for every dollar their male counterparts in education receive.

9. Female-headed Households: Approximately 42% of households in South Africa are female-headed, with around 60% of homes having absent fathers, causing financial strain.

Considering these factors, women globally tend to contribute 30% less to their retirement accounts. Botha also mentions the recent Sanlam survey, which reveals that 48% of women believe they are not saving enough for their retirement goals.

Furthermore, 26% confess that they cannot afford to retire and will have to work for as long as they can. Addressing the gender pension gap necessitates a multifaceted and complex approach that requires ongoing and dedicated efforts.

“We need to enable women to make positive choices early on, to put the building blocks in place for a long, fulfilling life. Part of this means making regular retirement contributions, however small these may be.

“It’s also critical that women have health-care protection in place. Financial advisers can play a pivotal role in helping women choose appropriate retirement plans, for example, and outlining the benefits of a life annuity.

“The earlier we can help women to invest in their financial future, the better for them, and our nation.”