Women are living longer which means they must save stronger

Nomha Kumalo, Managing Executive at MMI.

Women's Month is the same as most months – 31 days long – but an average woman’s life in SA is significantly longer than a man’s. At the moment females outlast males in our country by as much as four years.

That fact has some serious implications for women in terms of financial planning.

“Living longer means you need to have a bigger savings pot for retirement so you don’t outlive your savings," says Nomha Kumalo, Managing Executive at MMI Corporate and Public Sector, the division within MMI Holdings that services large and medium sized businesses through the Momentum, Metropolitan, Multiply and Guardrisk brands.

Kumalo estimates that the extra four years of life mean women need to save around 14% more than men in their retirement plan; “If a man saves R500 per month, a woman needs to save R570 per month to be able to buy the same pension at retirement”. She says the alternative is for women to work an extra one-and-a-half years to achieve a comparable output.

Kumalo points out that many women already start at a disadvantage in terms of providing for their financial future; “Women often spend less time working than men because they take time off to have children and to look after them which creates a gap in their income and ability to save. There’s also a persistent and shameful gender imbalance in average salaries in South Africa.”

In addition many South African women have been left short by leaving the responsibility for financial planning to a partner who may not make adequate provision or who abandons them without passing on a proper (or any) share of the benefits.

All of these factors compound into a potential retirement crisis for women unless they take action.

Kumalo advises on some key steps women can take towards a comfortable retirement:

1. Assume responsibility. This is your issue. Never default to someone else even if you are in a strong and positive relationship
2. Start somewhere. The earlier the better but it is never too late to get a plan in place and to begin to gain control over your future.
3. Get help. Find a registered and trustworthy financial advisor with whom you can confidently discuss everything about your financial wellness. Make them explain their fee/commission charges in advance.
4. Know the facts. Insist on explanations until you are clear. Get it in writing.
5. Be realistic. Don’t over-commit on what you can save and don’t assume on best case projections on investment returns.
6. Work from a budget. It is unlikely you will save significant amounts for the future without imposing discipline on your spending in the present. You can allow yourself some indulgences but make sure they are within the plan for the month.
7. Optimise your tax. Tax returns can be tedious stuff but doing them efficiently and making financial decisions with tax implications in mind can save you significant amounts of money and bureaucratic stress down the line.
8. Think ahead. Be aware of the long term implications of your actions especially in terms of career planning and major purchases like property and cars.
9. Be healthy. Financial, physical and emotional wellness go together. Being confident about your money and your health is the most powerful combination for a happy retirement.