Unequal retirement
CONTAIN THE GAP: PLAN TO LIVE TO 100 – AND SAVE 20% OF YOUR SALARY
Don’t leave the planning of your retirement to your partner, tackle money management together.
According to the World Economic Form 2017 Gender Gap report, women have 30% to 40% less money than men in retirement. The industry rule of thumb is saving 15% of taxable income for retirement. However, women must invest much more monthly if they hope to receive the same monthly pension as men.
Further, even if they retire with the same amount invested, women live longer and experience higher healthcare costs in retirement. So experts believe women should invest 20% of their earnings.
There are effective steps to contain the gender retirement gap. One of the most powerful steps is to negotiate her first pay cheque. Research shows women tend to ask for lower salaries than men do, thereby settling for less than they’re worth. There are endless opportunities for online, part-time and distance learning. Whether it’s a degree, diploma, certificate or short course, keep learning and adding to your arsenal of expertise. Many women stop working to raise children, but attest to not having carefully thought through the long-term implications.
Besides the loss of financial independence, time out of the workforce can affect self-esteem, future employability and future earning potential. It’s wise to consider alternatives like reduced working hours or performing locums. Avoid leaving personal financial planning to your partner and don’t assume they’re taking care of your retirement.
A partnership means tackling everything together – including money management.
Make it your job to understand the family’s personal insurance, savings, investments, the structuring of your respective estates and your will. Managing a budget can be empowering. Take control of the household budget and manage expenditure closely. The possibilities to generate additional income are endless, especially in our global online village. Rather than protecting your capital in low-yielding savings accounts, seek advice from an independent, fee-based financial advisor on how to invest more aggressively to benefit from market returns over the longer-term. As one ages, it’s advisable to move on to a more comprehensive medical aid option that provides extensive benefits, particularly for chronic medication, optical and dental benefits, home nursing and in-hospital procedures.
Get gap cover to cover the difference between what specialists in hospital charge and what the medical aid refunds. Working beyond 65 can enhance retirement funding and the quality of your retirement. When preparing your financial plan, ensure your advisor considers that, as a woman, you’re likely to outlive your partner and your living expenses may escalate significantly in the last years of life.
Craig Torr is a founding director of Crue Invest