The gender (financial) gap
It is often argued that money is gender neutral and speaking specifically to women is patronising. It is correct that the type of investment products and the basic principles of money are gender neutral however what is not gender neutral is the fact that women continue to earn about 30% less than men and remain the main caregiver in the family. Some might say that women face poverty in retirement because they are penalised for unpaid work and for living longer. To be fair, the living longer bit cannot be blamed on men.
As a generalization, women do most of the “unpaid” work in the household even if they have full-time employment. It is not surprising that a US study found that 92% of mothers with children under the age of 18 say they feel overwhelmed by the challenge of balancing workplace, parenting and domestic responsibilities.
Local ladies
If this is how women in the US are feeling, one can only imagine what mothers in South Africa experience. We have significantly higher levels of female unemployment and around 50% of mothers are raising their children alone, with only around 20% receiving regular support from the father. We are all told women need to save more for retirement, but the real issue is that women simply have less money than men for investing in their future. The 2022 Women’s Report, sponsored by the Stellenbosch Business School, found
Local ladies
If this is how women in the US are feeling, one can only imagine what mothers in South Africa experience. We have significantly higher levels of female unemployment and around 50% of mothers are raising their children alone, with only around 20% receiving regular support from the father. We are all told women need to save more for retirement, but the real issue is that women simply have less money than men for investing in their future. The 2022 Women’s Report, sponsored by the Stellenbosch Business School, found
that women’s careers are typically 30% shorter than those of men – because they have taken time out to be caregivers for their children and elderly parents. The report acknowledged that “this type of work is largely unrecognised and unpaid, and can significantly erode a woman’s ability to save for retirement”.
Saving for retirement
A study by US investment house Fidelity found that, for many women, saving for retirement is simply not possible. They found that, while more women are investing than five years ago, men still saved twice as much as women and the primary reason is the gender pay gap – men simply have more money to invest. Even in a family environment, women tend to focus their finances on their children while the husband tends to invest. This leaves a woman financially vulnerable in divorce. Around 44% of marriages end before their tenth anniversary when a wom-
Saving for retirement
A study by US investment house Fidelity found that, for many women, saving for retirement is simply not possible. They found that, while more women are investing than five years ago, men still saved twice as much as women and the primary reason is the gender pay gap – men simply have more money to invest. Even in a family environment, women tend to focus their finances on their children while the husband tends to invest. This leaves a woman financially vulnerable in divorce. Around 44% of marriages end before their tenth anniversary when a wom-
an is around 40 years old. If a woman only starts saving for retirement at age 40, she then needs to save 40% of her salary to meet a basic retirement income. Having children as a priority and saving 40% of a salary may not be realistic or even achievable for many women. Yet, living longer means women face higher healthcare costs than men and are also more likely to live alone in retirement. The good news is that women are starting to invest more – we see these figures not only globally but in South Africa. This is particularly true of young women. A prominent South African investment house found that around 42% of their client base is female compared with only 30% in 2015.
Confidence gap
When women do invest, they outperform men – a study of 5 million Fidelity customers over a ten-year period found women investors achieved higher returns than men. However, the survey also found that women are less confident about their investment abilities than men. This was highlighted in a survey by investment house BlackRock, which found that 72% of women rejected “riskier” assets such as equities, bonds or property, as opposed to 59% of men. Yet investing in these growth assets is the only way to grow wealth. The Fidelity study found that there is a real knowledge gap between male and
Confidence gap
When women do invest, they outperform men – a study of 5 million Fidelity customers over a ten-year period found women investors achieved higher returns than men. However, the survey also found that women are less confident about their investment abilities than men. This was highlighted in a survey by investment house BlackRock, which found that 72% of women rejected “riskier” assets such as equities, bonds or property, as opposed to 59% of men. Yet investing in these growth assets is the only way to grow wealth. The Fidelity study found that there is a real knowledge gap between male and
female investors, which could also explain the confidence issue. What does this mean for women and money? While there is a bigger battle to win regarding the gender pay gap and compensation for unpaid work, there are some ways women can empower themselves:
• Use the time before you have a child to grow your investments. Do not cash in those investments when you have a child or get married. Allow the power of compounding to work for you.
• Educate yourself about investments. Do not leave all your money sitting in a bank account. Women tend to make good investors as they have a better sense of risk and reward.
• Have your own money plan with your own bank account and credit record. Even if you have taken time out to raise your children, you still need your own retirement plan, don’t just rely on your husband’s – it won’t be enough.
• Be empowered in your relationships. Have honest discussions around the “unpaid” work in the household and how you can remain financially independent.
• Plan for a second career. Women have more time and opportunity to work and earn an income once the children are grown up. For most women, this may be the only way to fund their retirement. Remember to put the oxygen mask on yourself first. Your financial stability is critical to the survival of your family. You can only give if it is sustainable.
• Use the time before you have a child to grow your investments. Do not cash in those investments when you have a child or get married. Allow the power of compounding to work for you.
• Educate yourself about investments. Do not leave all your money sitting in a bank account. Women tend to make good investors as they have a better sense of risk and reward.
• Have your own money plan with your own bank account and credit record. Even if you have taken time out to raise your children, you still need your own retirement plan, don’t just rely on your husband’s – it won’t be enough.
• Be empowered in your relationships. Have honest discussions around the “unpaid” work in the household and how you can remain financially independent.
• Plan for a second career. Women have more time and opportunity to work and earn an income once the children are grown up. For most women, this may be the only way to fund their retirement. Remember to put the oxygen mask on yourself first. Your financial stability is critical to the survival of your family. You can only give if it is sustainable.
