Women trail men in life's financial stakes, generally earning less, with less financial security in retirement. This was highlighted in a report released by the National Institute on Retirement Security, a non-profit research centre in the U.S., which states that women are 80 percent more likely than men to be impoverished at age 65 and older, while women aged 75 to 79 are three times more likely.
While the reasons for this are numerous, the solutions far outnumber the trials women face. It takes planning and a goal, but achieving financial independence and security is easier than you think.
A few simple steps mean you can wrest back control of your financial security in retirement. Don’t become another statistic – take proactive steps towards a more secure financial future.
FedGroup Life CEO, Walter van der Merwe looks at the challenges facing women in retirement, and what we can do now to overcome the stats.
The best retirement advice is to start saving now, and the sooner you start the better because time is often the best predictor of investment success. Start by investing in a simple low risk, long-term investment that attracts low fees, and benefits from the power of compound interest, even if it means making the minimum monthly contribution required. With this approach, even low-income earners can save.
Set a goal
Set an investment goal by determining how much you need to save to ensure a comfortable retirement and work out the specific monthly contributions that are required to achieve that amount over the course of your working years. The numerous online calculators available can determine the value of a fund at a specific date in the future, which is highly informative when shaping retirement investment strategies.
Ask an expert
Alternatively, establish your retirement goals and objectives in consultation with a financial planner to ensure a more individualised outcome is achieved. Interestingly, the 2015 Fidelity Investments Money FIT Women Study, designed to measure how women view and address their finances, found that 92% wanted to learn more about financial planning, 75% wanted to learn more about money and investing, and 83% wanted to get more involved in their finances within the next year. However, a 2012 survey conducted locally by Visa, found that less than a third of the 2,000 women polled had consulted a financial adviser.
To overcome any reservations you may have, get references from friends or family for qualified financial planners who have offered them unbiased and beneficial investment advice in the past. Once you find an advisor who you connect with and who understands your individual needs, engage with them on an ongoing basis to proactively manage your investments over time.
Empowering yourself with some degree of basic financial knowledge is imperative. We live in an age of unprecedented access to information, however a 2013 Merrill Lynch report that found that 55% of women surveyed knew “less than the average investor about financial markets and investing in general."
Improving your investment knowledge is the only way to quash any fear or apprehension you may have about long-term investing.
With greater knowledge and investment acumen you'll also be able to play a more active role in all aspects of your family's long-term financial planning.
By acquiring the know-how you'll be able to venture into other investments. Possibly the best example of this has been the boom in Chinese "pyjama traders" – older housewives who trade from home using the various platforms on offer. According to available statistics, there are around 90 million individual brokerage accounts in China, and many of them have amassed small fortunes. The trick is to assign a smaller portion of your monthly savings for more speculative investing in riskier assets such as stocks, which can yield higher returns.
Numerous studies suggest that women actually make better long-term investors than men. A study conducted at the University of California found that the investment returns of female investors beat their male counterparts by around 1 percentage point a year. This phenomenon has been attributed to the ability of women to remain level headed amid market turmoil and make more rational decisions. This personality trait also makes women more likely to lose less in a downturn. For instance, in 2015, when markets fell, women lost an average of 2.5 percent, compared with a loss of 3.8 percent for men.
And lastly, South African women are some of the most financially savvy females in the world. A global survey conducted by Synovate in 2011 rated local women among the most financially independent globally. Nearly 70 percent of South African woman interviewed considered themselves financially independent – defined as not being dependent on their husbands or partners for money – placing them on a similar level with developed nations such as France (80%) and Britain (76%).
If that is something that resonates with you, particularly in the context of retirement, then it's best you heed this advice and start investing, now.