What are the best options for women who retire?

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Retirement is an inevitable part of working life despite the different approaches to retirement. Recently, tennis superstar Serena Williams announced her retirement, expressing the difficulty of moving on from the sport she loved. She was hesitant to use the word “retirement” and rather called it an “evolution” away from tennis, summing up the mixed feelings that often accompany closing one chapter as we move to another.

I have admired how Williams fought for equal pay for female tennis players and has not been shy to take on the status quo. In a February interview, she told CBS News that while attitudes towards women receiving equal pay in sports were changing, it would take more time to resolve the issue.

The World Economic Forum released its 16th Global Gender Pay Gap report that showed the improvement of the overall gender disparity across politics, work, health and education, but stating that it will take 132 years to reach full parity — compared to 136 years as reported last year. Maybe Williams is right about time. Things are changing but not fast enough.

Women not being paid equal pay for equal work is not a new story. The International Labour Organisation formally adopted The Equal Remuneration Convention in 1951. The convention advocates for equal remuneration for work of equal value independent of whether a man or a woman performs it. Seventy years later, women are still fighting for equal pay. 

But the issue of equal pay and equal work doesn’t just put women on the back foot in their careers, it also sets up a weaker play for when they retire. This is because when they earn less than their male colleagues, they save and contribute less to retirement vehicles designed to help them at the tail end of their lives.

A 2020 report from the National Institute of Retirement Security in the US researched the retirement gender gap and its effects. According to the report, by tracking age earnings over the course of a career, the data show that men with defined contribution savings have higher age earnings than women with defined contribution savings at every stage of their careers (men and women without defined contribution savings have even less).

Skyrocketing global inflation coupled with the high cost of fuel means that fixed-income earners are feeling the pinch. And this can put women in a more dire situation in retirement, perpetuating the cycle of inequality. While some of these factors may be outside of their control, here are a few things women can do to pad their retirement savings.

Start right now

Three things have the biggest effect on how much you have at retirement: what you pay into your retirement fund, the amount of time you give it to grow and the investment strategy of the fund. The earlier you start the more time you give your money to grow. So, when you start working, make sure that you are part of your employer’s fund and use your employee benefits to increase your retirement savings.

Financial literacy

Empowering yourself with information is critical to not only making the right choice but also to start asking the right questions. Financial literacy may not change the reality that women earn less, however, it can help you find ways to stretch the money that you do earn. Often retirement fund members can make poor decisions because they don’t understand the consequences of acting or doing nothing. 

One of the ways in which the company I work for is empowering employees is through our employee benefits explained dictionary: a glossary of terms that help to demystify complex financial terms and concepts.

Get sound advice

As women, we may experience various milestones, such as getting married, being pregnant, buying a new car and so forth. At every milestone, it would be prudent to get sound advice on how to adjust your budget and your retirement plans. Retirement benefit counselling, for instance, can be instrumental in improving outcomes by empowering members with relevant information at key decision-making points. 

 Work five years longer

Practically, working for a longer period will buy you time to save more for retirement and will also make sure that you rely on your retirement savings for a smaller amount of time. If your employer allows you to work until the compulsory retirement age of 65 in South Africa, seriously consider this option to pad your retirement savings.

Consider a side hustle

Another trend that can help women go into retirement in a stronger position is to consider taking on a side hustle. Research, such as the 2021 Mastercard Index of Women Entrepreneurs released earlier this year, points to more women pursuing alternative income streams, and this could result in more disposable income to put away.

While we continue to fight for gender pay parity, we can also take active steps to retire as comfortably as possible. Multi-tasking is not something that is new to women.

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

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