Women are less ready for retirement. Here's how to close the gap.

South Africans at all levels of income, both men and women, are not saving enough for retirement. According to estimates by the National Treasury, only 6% of South Africans have saved enough to ensure a comfortable retirement. And within the small group of people who feel prepared, women lag.

"According to a study called Perceptions of Retirement Adequacy: Evidence from South Africa, employment inequalities can mean that women feel less confident than men about being prepared financially for retirement," says Jennifer Arendse, General Manager| Discovery Invest Head of Marketing. "Having a thought-out and tailored investment plan for retirement is a priority that South African women can't afford to ignore."

It's noteworthy that the retirement gap between men and women is not exclusive to South Africa; it's a global phenomenon. But why does it exist in the first place? Here are the two main reasons:

Why there's a gender retirement gap

1. Women generally earn less than men, so have less to save for retirement

On average, women earn less than men across all educational levels. According to data from StatsSA, South African women with no education earned 54.4% of the income earned by their male counterparts, while women with a high school or tertiary education respectively earned 68.2% and 63.1% of their male counterparts' average income.

"Women are also more likely to take leave to care for an ailing family member," Arendse adds. Care activities in South Africa constitute 13.3% of women's non-market time, compared to 7.6% for men. These are vital and valuable contributions towards the wellbeing of a woman's family; however, it's estimated that these 'interruptions' result in women spending 10 years less in the workforce - meaning 10 fewer years of potential retirement savings.

2. Women generally live longer than men do, so need more savings to retire

The retirement gap is made tougher by the fact that women in countries with established socio-economic order live on average four to seven years longer than men do. According to StatsSA, the life expectancy of women in South Africa is 65.6 years, compared to 60 years for men. Since women have a higher life expectancy at retirement age, they need relatively more retirement savings than their male counterparts.

5 steps women can take to close the retirement readiness gap

According to Joseph Thompson, co-founder and CEO of Aid:Tech, 55% of the unbanked population in the world (having no access to financial products) are women.

"Everyone wants financial security when they stop working - and for most women, that means taking steps to plan more deliberately, and without delay," says Arendse. Here are her five steps to help women prepare better for retirement:

1. Own your financial future: It's easy to rely on partners, parents or even children to 'sort out the admin', but every woman needs to take ownership of her own financial future. Too many women don't engage because they are "terrified of getting it wrong", notes Ann Wilson, the Wealth Chef. These days, however, there is plenty of high-quality information available, as well as handy retirement planning tools to help you make decisions. It all starts with making your finances a personal priority and taking steps to become more informed. (Learn more on this Your Money Matters podcast, Can saving for retirement be sexier than it sounds?)
2. Get professional advice: Researching and even completing a financial education course are good steps to take for general education, but a certified financial planner can help tailor a financial plan for your specific needs and circumstances. It's also great to have someone you can count on for objective money advice. This can help you avoid common and costly financial errors (like cashing out your retirement savings instead of preserving them when you change jobs).
3. Start saving and investing - earlier and more: "Industry reports reveal that fewer women save and invest than men," says Arendse. "To reverse the downward trend and beat inflation, women need to start investing more, over a longer term. This is what's needed to generate enough income to live off in retirement."
4. Look after your health. It makes sense that what's good for your health is also good for your wealth. By following a healthier lifestyle - exercising regularly, eating nutritious food and reducing tobacco and alcohol use - you can manage and even prevent lifestyle-related diseases like cardiovascular disease, cancer, chronic respiratory disease and diabetes. Over time, good health can save you thousands in medical expenses and increase your productivity, boosting your discretionary savings. This is clear from Discovery Vitality's data, which shows that, when compared to non-Vitality members, highly engaged Vitality members have an almost 60% lower risk of death and 14% lower healthcare costs and are 99% less likely to be in arrears.
5. Invest for growth: Arendse also notes that investing in "a well-diversified, high-equity portfolio is the most effective and reliable way to grow your capital over the long term - so it's worth doing what it takes to optimise your returns. This is what will help women achieve financial independence and close the retirement readiness gap." Now that's a goal worthy of Women's Day!