The 2022 edition of the 10X Investments Retirement Reality Report (RRR22), released on September 30, confirms the findings of previous years’ reports: women are far behind men in South Africa when it comes to preparing for retirement and they continue reject the best chance they have of catching up.
“South African women who are able to save for retirement and think it is a priority are in the minority,” says Khoosal-Kala. “Even among this small group very few do what is best to make their savings work for them, which is saving regularly, even small amounts of money, into appropriate, low-cost, tax-effective retirement savings vehicles and not touching the money, come what may.”
The RRR22 is based on the Brand Atlas survey which tracks the lifestyles of the 15,4 million economically active South Africans (16 years or older, living in households with a monthly income of more than R6,000 pm, with access to the internet).
The proportion of women, 44%, who are not saving or investing at all was a little improved on last year’s 45%, a measure where men widened the gap, falling to 35%, from 38% last year.
In total, 74% of female respondents indicated that they don’t save, or, if they do, don’t invest their savings for growth. The RRR22 showed that the percentage of women who are embracing investing (rather than just saving their money) is ticking up, but the improvement is off a very low base. There is a long way to go to catch up with South African men, who are not in the best situation themselves.
In this year’s survey, 15% of the women polled said they invested their money for growth, up from 14% in 2021 and 13% in 2020. For men, the trend edged in the wrong direction, down to 23% from 24% in 2021, after an improvement on 22% in 2020. Including respondents who said they invested as well as saving cash, the number increased to 27% for women, up from 24%, and stayed steady at 39% for men.
Khoosal-Kala said it was understandable that people with limited savings and no safety net would be reluctant to expose those savings to market risk, especially if these savings might be needed suddenly to cover short-term emergencies.
“However, for those with longer-term objectives, such as funding their retirement, storing money away in a savings account, where the interest earned is often lower than the current inflation rate, destroys rather than builds wealth.”
There are many reasons for the discrepancies between men and women, not least that women are less in educated in general and earn less on average. Partly this is due to the systemic gender disadvantage, which tends to start at birth, is often magnified through education and peaks during working life (more so if a woman’s career is interrupted by pregnancy and the raising of children).
But women are also often victim of their own poor choices. They are less likely to plan for retirement than men (49% v 44%), they are less likely to have a good understanding of their corporate retirement savings scheme (30% v 41%) and they are twice as likely not to have any idea what is going on (19% v 9%).
“None of this is to make light of the very real struggles many people in South Africa, and women in particular, face to survive, never mind save money for another time,” said Khoosal-Kala. “It is just a terrible pity because there are situations where women would make a different choice if they just knew what the outcomes would be.”
Cashing out savings when leaving a job is another area where women’s behaviour tends to exacerbate their troubles. Women are 50% more likely to cash in their retirement savings than men on leaving an employer. This is one of the classic retirement savings mistakes as not only does a saver have to start from zero again but she loses out on all the growth those savings would have generated over the years before retirement.
As Nozi van Heerden, well-known blogger and financial enthusiast, recently told 10X Investments Women’s Month Webinar, retirement savings are sacred. She even suggested (half jokingly) that one should rather sell a kidney than cash out their savings.
The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. 10X Investments is an authorised FSP (number 28250)
