Your man shouldn’t be your plan for retirement

A new report on retirement readiness in South Africa found that significantly more women than men don’t have a plan for retirement, which suggests the gender inequality gap will extend into retirement.

10X Investment’s first annual Retirement Reality Report (RRR), released on September 30, found that women need more for retirement (since they live longer than men on average), but that they’ve saved less.

The report noted that women in SA earn about a quarter less than their male counterparts, “a disparity that is exacerbated by the increased likelihood that their careers will be interrupted during pregnancy and child-rearing”.

A surprising statistic revealed by the report is that a large proportion of women don’t have a plan in place to bridge the retirement gap. The RRR found that 43% of female respondents didn’t have any form of retirement plan, versus 39% of men.

Women who assume “My man is my plan” risk a nasty shock. Even for the happily married, it’s important to have an understanding of your finances.

We should have to plan for the worst (divorce and death), even if we hope for the best (a long and happy marriage).

Don’t believe anyone who tells you that retirement planning is too complex for you. Modern technology, such as online calculators, work to help you understand where you are, where you need to be and how to bridge the gap. This brings retirement planning within anyone’s grasp.

To be confident in managing their finances and to enable them to narrow the gap with men, women need only understand the basics.

Save 15% of your salary from day one until you retire (i.e. a working life of about 40 years), invest your savings in a well-diversified, high equity fund and ensure fees are kept low.

Investing is simple, your money grows by the gap between returns and fees, so simply put, you need to maximise growth and minimise fees.

Money grows through wealth creation and, since companies create wealth through profits, it makes sense to own shares in companies.

So how do you decide which companies to own? You don’t; rather use an index-tracking fund to own a little bit of all of them.

Fees are charged for services provided so the easiest way to reduce them is to avoid buying things you don’t need, such as a platform, an investment consultant, or an expensive fund manager. Rather invest in a low-cost index tracking fund.

Sohini Castille is head of employees benefits consulting at 10X Investments