A recent press release from Old Mutual points out that while saving habits among women in South Africa have improved dramatically, latest statistics show that there are still major concerns when it comes to their retirement planning, says Pieter Willem Moolman.
According to the results of their Retirement Monitor survey, when asked what they were currently saving for, only 47% of women respondents answered “retirement”.
It also revealed that merely 6% of women said that they make additional contributions to their retirement funds, compared to 13% of men.
Another worrying statistic is that 59% of women admitted to taking all or some of their company retirement funds as cash when leaving their jobs, compared to 49% of men. This is compounded by the higher likelihood of career interruptions experienced by women.
According to Seelan Gobalsamy, managing director of Old Mutual Corporate, it is estimated that employees need to contribute at least 15% of their income over an uninterrupted period of 40 years if they want sufficient savings at retirement to maintain their standard of living.
He says that a woman who stops her monthly retirement fund contributions as a result of taking two years off (to start a family) between the ages of 30 and 32, will have about 10% less at retirement than one without career interruptions. This is due to less contributions being made to retirement savings, as well as losing out on potential salary increases.
When it comes to retirement savings, the power of compound interest means that the earlier you start, the more time there is for your money to grow. Even small regular contributions made early in your working life can make a huge difference.
Life is unpredictable and changes to your situation can have a significant effect on your financial preparedness for retirement. Divorce, children and health issues are factors that could require an adjustment in retirement planning.
It is also crucial that you understand where your fund is invested, whether it is in the correct portfolio to ensure maximum growth, who the trustees of the fund are, how much life and disability cover is provided and how your monthly contributions are allocated.
As with most things in life, it is ultimately up to you to take responsibility for your retirement savings in order to ensure you are able to live out your golden years in comfort. This means arming yourself with as much knowledge as possible and taking action when required.
Speak to an accredited financial advisor who can assess your overall financial situation, including your retirement savings position, and craft a realistic, personalised savings plan that will guide you towards reaching your goals.
Don’t let longevity become a risk factor in your life!
Pieter Willem Moolman is the owner of PWM Financial Management in Port Elizabeth. Visit www.pwmfb.co.za or phone 041 582 3034.