The gender retirement gap

A look at effective steps women can take to contain the seemingly-insurmountable gap.

During their working careers women face a unique set of financial challenges, only to be faced with a second unique set of challenges when they retire. Vaster than the gender pay gap, although possibly less well publicised, is the significant gender retirement gap that many women are confronted with in their so-called golden years.

Despite all the advances women have made in the realm of personal finance, they still lag behind their male counterparts when it comes to saving for retirement. According to the World Economic Form 2017 Gender Gap report, women have 30% to 40% less money than men in retirement, despite the fact that they live longer than men. While the global gender payment gap is commonly quoted at between 10% and 20%, the reality is that the gender retirement gap is significantly greater. In fact, more than half of all European countries have a gender retirement gap of more than 30%.

The industry rule of thumb when it comes to saving for retirement is set at 15% of taxable income. However, women need to invest much more than men on a monthly basis if they hope to receive the same monthly pension at retirement – although the problem doesn’t end there. Even if they retire with the same amount of money invested, women live longer and experience higher healthcare costs during retirement which serves only to widen the gap. To retire with the same pension as men, experts believe that women need to invest 20% of their earnings to be in the same position as men.

Expecting women to save at a higher rate is a tall order especially because many women have to interrupt their careers early on to bear children, and again later in their careers to care for elderly parents or family members. Effectively, women have less time to save and less income to save with. The consequences of out-living men is that many women end up living alone for the last few years of their lives at great expense, especially considering the cost of frail care and assisted living facilities.

In essence, the gender retirement gap is the result of unique challenges that women face over their lifetimes which include, but are not limited to, the following:

Less is not more

According to the Pulse of the People 2017 report, South Africa has one of the highest gender pay gaps in the world – with women in SA earning 27% less than their male counterparts. Significantly, the report also found that the pay gap became wider amongst top earners, with local men earning as much as 39% more than women at a similar level.

This pay gap only serves to exacerbate the personal situations that women find themselves in. A recent 10X Investment survey found that 32% of South African women feel unsure about their retirement plans. According to Stats SA, two-thirds of the births registered in South Africa do not include details of the father which means that a massive part of the female workforce is comprised of single parents who, despite the additional financial and logistical burden of looking after children, are being underpaid and undervalued.

More than mere pay disparity, the pay gap has far-reaching effects on the level of group risk cover that women enjoy, medical aid options, bonuses and access to retirement funds. Group life cover is generally calculated as a multiple of annual income, which means that women are eligible for lower levels of cover than men. Similarly, bonuses are often calculated as a percentage of income which, once again, will leave women short-changed. Earning on a lower salary bracket often precludes women from accessing retirement fund options, career progression and overall pay equity, making the effects of pay disparity both long-lasting and far-reaching.

Career interrupted

Besides childbirth and choosing to stay at home while the children are young, many women sacrifice their careers to care for their elderly parents, in-laws or special needs children. Women participate in the workforce just 75% of the time that men do, and are almost twice as likely to become a part-time worker. On average, men spend 38 years in the workforce whereas women average a working life of 28 years. Given that interest compounds most effectively when it is provided with uninterrupted time, gaps out of the workforce make it difficult for women to keep pace when it comes to accumulating invested wealth. Interrupting one’s career (for whatever reason) should not only be considered in terms of earnings lost, but also the extent that it limits the growth of earnings for women into the future.

Pink tax

According to a recent report by Use Your Voice (UYV), an NPO that distributes sanitary pads across South Africa, women pay as much as 13% more for personal care products than men. This strategy of ‘shrinking and pinking’ has resulted in women paying more for the equivalent product that just happens to be packaged to appeal to women. Their analysis of common, every-day products across a number of mainstream retailers was hugely revealing. At a major grocery chain, women are being charged R25 more for a household name disposable razor just because it came in pink. At a popular clothing retailer, women are being charged R20 more for an identical t-shirt despite the fact that the men’s t-shirt uses more fabric. Similarly, exactly the same multi-vitamins ‘for him’ are priced at R89 and at R105 ‘for her’.

Courage and confidence

When they do invest, women actually make better investors than men as they are more cautious, tend to trade less and are more likely to follow investment advice. Research done by Mercer Consultants found that women have less financial courage and are less confident about their financial security than men. As a result, when women save disposable income they tend to leave a lot of their money in cash or low-yielding savings accounts. According to Mercer, women are less likely to choose aggressive, growth-targeted strategies and consequently miss out on opportunities for long-term growth. According to a TIAA 2017 report, outside of their retirement funds, women tend to hold safer assets such as cash and money market funds – with their main aim being capital preservation rather than growth. Women also tend to simply invest in the default options offered by their group retirement schemes which results in less than adequate investment returns.

“A lack of time, confidence, access to the right information, industry jargon and not knowing where to start are just some of the obstacles that stop many women from thinking that investment is for them,” according to the Fidelity International’s Financial Power of Women report. “Until these hindrances are removed, or at the very least addressed, we cannot unlock women’s financial power.”

Living longer

An interesting but little-known statistic is that 80% of men die married while 80% of women die single. This is particularly significant because it means that the vast majority of women will encounter the additional cost of either living alone in retirement without the benefit of cost-sharing, or will need to finance the cost of frail care or assisted living. Women also typically spend about 7% more than men on healthcare during their retirement years, with costs being difficult to manage as they age. While housing and other living costs can be managed through downsizing and financial management, healthcare costs are a difficult line item to contain.

Although the extent of the gender retirement gap may seem insurmountable, there are effective steps that women can take to contain it:


One of the most powerful steps a woman can take is to negotiate her first pay cheque. Research shows that women tend to ask less than men do and therefore tend to settle for less than they are worth when it comes to salary. It is almost impossible to achieve income parity if women are entering the workforce earning less than their male counterparts

Never stop learning

Not everyone has the opportunity to attend university, and not everyone needs to. There are endless opportunities for online, part-time and distance learning in any subject ranging from hairdressing to horse massage. Whether it’s a degree, diploma, certificate or short course, keep learning and keep adding to your arsenal of expertise.

Think carefully before quitting your job

Although a lot of women choose to stop working in order to raise children, many women attest to not having carefully thought through the long-term implications of doing so. Besides the loss of financial independence, time out of the workforce can affect self-esteem, future employability and future earning potential. It is wise to consider alternatives such as reduced working hours, part-time work or performing locums.

Be involved in the finances

Avoid leaving personal financial planning to your partner, and do not assume that your partner is taking care of your retirement. The very nature of a partnership means tackling everything together and this includes 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 incredibly empowering. Rather than bemoaning ‘pink tax’ and the high costs of personal care items, take control of the household budget and manage expenditure closely.

Consider alternative sources of income

Employment is never guaranteed and it makes sense to consider alternative sources of income as protection against possible retrenchment or job loss. The possibilities to generate additional sources of income are endless, especially in our global online village.

Seek investment advice

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 so as to benefit from market returns over the longer-term.

Choose a comprehensive medical aid plan

As one ages, it is advisable to move onto a more comprehensive medical aid option that provides extensive benefits, particularly when it comes to chronic medication, optical and dental benefits, home nursing and in-hospital procedures. In addition, put a gap cover benefit in place to cover the difference between what is charged by the specialists in hospital and what is refunded by the medical aid.

Plan for a longer working career

Working for 40 years to fund for a retirement which could last in excess of 30 years is incredibly difficult to achieve. The age of 65 is really nothing more than a tax event, with many people choosing to work and generate an income well beyond this age. Working for longer can significantly enhance your retirement funding and ultimately the quality of your retirement.

Plan to live to 100

Increased human longevity and advances in medical science means that we are living longer than ever before. When preparing your financial plan, ensure that your advisor takes into account that, as a woman, you are likely to outlive your partner and that your living expenses may well escalate significantly in the last years of life.


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Craig Torr

Crue Invest (Pty) Ltd


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