Gender pay gap and poor retirement outcomes

Pay inequality between men and women is one of the reasons so many women in SA aren’t able to retire comfortably.

The 2017 Pulse of the People report, run by market research firm Ipsos, found that, on average, women in SA earned 27% less than their male counterparts. The report found this gap becomes even wider when looking at top earners, where SA men earn as much as 39% more than women at a similar level.

The correlation between the gender pay gap and poor retirement outcomes for women is complex, with key empowerment issues such as these being mutually reinforcing.

The wage gap may go some way to explaining why so many South African women aren’t prepared for retirement. The two are part of a vicious cycle of sorts.

Providing for retirement, frequently left to male partners, is a classic empowerment issue. Not being dependent on someone else for financial planning is very liberating. The same goes for knowing your future is taken care of.

Getting involved in the family’s long-term financial planning is often a key step in a woman taking charge of her life. Women must believe in their ability and the value they can add at all levels of life.

Retirement planning is actually not that complicated and doesn’t require the services of various “experts”, all of whom charge a fortune for services or advice.

According to the 10X formula, investing 15% of your salary for 40 years in a high equity fund and paying less than 1% of it away in fees will ensure a decent retirement.

Many women – and men – have been brainwashed into thinking they couldn’t possibly make the right choices for themselves without expensive advice. This is nonsense.

Most people who run a household will already be familiar with a lot of the pitfalls on the retirement savings journey, being ripped off by salesmen who seek to confuse you high on the list.

There’s no better moment than now to start planning for retirement. Planning is about sticking to a simple plan and making sure you get the best value for your money/savings over the long-term.

Emma Heap is head of retail at 10X Investments