Women can close their pension gap, and retire comfortably

Women can close their pension gap by taking several steps to improve their retirement outcomes.

Studies show that in addition to the gender pay gap where women are paid up to 35% less than their male counterparts, there is also a massive gender retirement gap and women are significantly worse off than men when it comes to their retirement savings income.

According to the South African Treasury, only six out of every 100 South Africans will be able to retire comfortably, while a recent poll shows more than a third (35%) of middle-class South Africans are not saving at all for their pension.

“Most people see retirement as a time to relax and take it easy. For women, especially, the reality is often quite different. Retirement can cause severe financial stress, especially if you have left your job before your planned retirement age or must care for an elderly or sick spouse,” says Craigh Chidrawi, executive head of retirement and COO of employee benefits advisory firm NMG Benefits.

“That is why it is even more important for women to ensure they have a comprehensive retirement plan in place, which allows for enough pension savings for long term use and reduce the likelihood of having to depend on your friends or relatives to fill the gaps.”

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Women can improve their retirement outcomes by planning for the long term, increasing their retirement fund contributions, reviewing their expenses, getting involved in family finances, talking to a financial planner and beating the tax burden, he says.

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Plan for the long term

Ideally, building your retirement fund is a lifelong task, Chidrawi says.

“The earlier you start saving for retirement, the more time your money has to grow. While it is tough to make ends meet right now, it is critical that you make retirement saving and planning a non-negotiable part of your monthly budget.”

Increase your pension fund contributions

One of the major reasons people do not have enough money to retire on is that they simply do not save enough.

Chidrawi says the more money you can save while you earn, the bigger the nest egg you will have to provide financial security in your retirement years. Work through your budget carefully and see where you can make extra savings to put into your pension fund.

Review your expenses

Reviewing your expenses to find additional income is important, Chidrawi says. By identifying areas where you can cut back on spending, you can potentially increase your savings for retirement.

“Taking a closer look at your monthly expenses, you may discover that you are overspending in certain areas or paying for services you do not need. This can free up extra money that you can use towards your retirement savings.”

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Get involved in the family finances

Women often tend to leave financial matters up to their spouses or partners, but Chidrawi says that is not good enough. “Women must get more involved in all aspects of their family’s financial planning. They must know how much money is spent and saved, as well as the current state of their retirement funds.”

Talk to a financial planner about pension

Although many women save for retirement and it is a good start, it is important to talk to a financial planner who can help you review your financial needs and goals, make the right investments to ensure you have enough money for your retirement and ensure that your resources are handled in a safe and predictable way.

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Beat the tax burden

One of the biggest benefits of retirement planning is to structure your retirement funds in a tax-efficient manner.

Chidrawi  says the more control you have over your income sources in retirement, the more likely you are to be able to reduce your tax burden. As future tax regulations are difficult to predict, diversifying your income sources in retirement could save you a lot of money in the long term.