‘Women saving far too little for retirement’

More than 40% of South African women, across all demographics, have no investments or savings in any form.

And, overall, women in SA have significantly less saved for retirement than men.

This is according to the first 10X Retirement Reality Report released in late September.

The report, published by investment company 10X Investments, revealed worrying figures detailing the extent of the country’s private retirement savings crisis and its pending impact on the government resources in years to come.

Most South Africans do not have a retirement plan, or just have a vague outline, with only 6% of the country’s population on track to retire comfortably.

According to the findings of the survey of more than 11million South Africans, 46% have a profound lack of trust in the retirement industry.

The survey also pointed to a gender pay gap, where women earn about a quarter less than their male counterparts, resulting in a knock-on effect on their retirement savings.

“Women tended to prioritise expenditure for living costs associated with childcare and parenting over planning for retirement,” the report said.

Emma Heap, head of growth at 10X Investments, said: “If women are not investing their money for growth they will have little chance of beating inflation and having enough money to draw a decent income after retirement.

“Hopefully the report will inspire women to take control of their finances and ensure their money is working as hard for them as they are for it.”

Lizl Budhram, from Old Mutual Personal Finance, said data from the 2018 Old Mutual Savings and Investment Monitor showed that living from pay cheque to pay cheque is an unhealthy cycle that requires immediate redress.

“Historically, many households had to make ends meet in a low-income environment that made saving or investing money virtually impossible.”

Despite rising prices, high personal debt, insufficient earnings, high unemployment and the need to take care of family members, Budhram believes it is still possible to reinvent Africa’s savings culture.

“It is critical, particularly for younger generations, to recognise that they do not need to fall into the financial traps their parents found themselves in.

“Today, young people have far greater access to economic participation and opportunities, their earning potential is higher and, possibly most importantly, they have greater access to financial education, solutions and services.”

She encouraged young people to constantly evaluate their financial situation by:

• Partnering with a financial adviser who can offer guidance on financial decisions for long-term wealth creation;
• Tracking daily spending through clever technology such as budgeting apps; and
• Dedicating time to upskilling financial literacy with online education courses.

“To change our money habits, we need to stop, reflect and make rational decisions that can pave the way for future generations to enjoy financial freedom – and stop the pattern of living from pay cheque to pay cheque.

“Now is the best time to start,” Budhram said.

Chris Eddy, senior investment analyst at 10X Investments, said the fact that only 6% of South Africans could retire comfortably was most concerning.

“The report highlights trends that contribute to the fact that many South Africans fail to retire with dignity.

“That 62% of respondents either had no retirement plan, or just a very vague one, shows that most South Africans aren’t taking any action to address this crisis,” Eddy said.

“Lack of education about the importance of saving for retirement and how it should start from the first day of a working life is a huge problem.

“There is an urgent need for education around the importance of saving for retirement, what goes into saving for retirement and how to reach your retirement goal.”