Women & Retirement...#BalanceforBetter

Image Credit: Trey Ratcliff/Flickr

According to the Financial Times, in the UK, Females set aside average £182 per month compared to £260 for males. This trend however is common in many places other than the UK. But what could be the reason why female contributions to retirement savings are generally poor?

Citing a recent study carried out by The German Institute for Economic Research (DIW). The general assumption is that women are more risk averse than men and therefore are more inclined to be conservative in making investment decisions. However the conclusion of the research challenges this view.

The study demonstrated that men and women are equally likely to take a chance on risky investments—assuming that they have the same financial resources at their disposal. So the conventional cliché that sex is a determinant factor in investment decisions no longer holds true.

This survey from data of more than 8,000 men and women further concluded that Women are likely to have cautious investment habits only because they have only half the investment resources available that men have at their disposal. So it can be said that the difference in funds at disposal between men and women is the primary element that gives rise to more women than men investing their savings in secure financial products.

In a recent publication supporting the conclusion above, Goldman Sachs in its 2018 UK Pay Gap report released on 25 March 2019, revealed that its female employees in the UK were paid a mean average of 50.6 percent less per hour than their male counterparts in 2018, citing a lack of women in senior management roles as a reason for the gap.

Though consensus beliefs, backed by reasonable data will bring to bear the fact that female pay grades could be considerably lower than male pay grades globally, this doesn't provide strong support for the fact that Women's retirement savings are currently at record lows? 

Should we therefore conclude that the contrast between gender retirement planning is attributed to the fact that men think more about retirement and are therefore more prepared for it? Obviously not. Further studies have shown that perceptions of retirement and economic living standards have been associated with financial preparedness. However, women were still economically disadvantaged compared to men as a result of lower salaries, prolonged career breaks, and relative longevity impacting negatively on their financial preparations and ability to embark on long term savings plans.

Organizations like Goldman Sachs are leading initiatives to address the gender pay gap by setting out a target of increasing the percentage of women in its incoming junior analyst class to 50 percent, and launching a wide-scale marketing campaign entitled #WhenWomenLead in a bid to improve diversity within leadership. 

Hopefully, many more organizations can take a cue from initiatives such as this to narrow the gender pay gap as they strive towards achieving #BalanceforBetter.