Commentary: More needs to be done to help women bridge the retirement gap as inflation continues to sting
In Singapore, women are more likely to face a heightened financial burden in their sunset years, an issue that is exacerbated by the fact that they have a higher life expectancy than men.
Singapore is unquestionably a prosperous and fast-growing country, with a robust economy and a high standard of living.
However, there is a flip side.
The nation-state has also been named the world's most expensive city for the eighth time in a decade, and Singaporeans are feeling the pinch, with inflation causing increases in everything from consumer goods to public transportation fares and healthcare costs.
However, acknowledging the financial concerns of Singaporeans also requires understanding intersectionality, given the significant gender differences when it comes to savings and investments.
Because of these differences, women are more likely to face a heightened financial burden in their sunset years, an issue that is exacerbated by the fact that they have a higher life expectancy than men.
The average life expectancy of Singaporean women is 86 years, about five years more than men.
When you consider the fact that the retirement age is currently set at 63 years old, most women would need to prepare enough funds for a retirement life of around 23 years.
WOMEN’S RETIREMENT GAP
A recent Fidelity International survey highlighted that women have their long-term economic prospects top of mind.
The Global Women & Money Study 2023 found that 89 per cent of women in Singapore worry about the rising cost of living, while 80 per cent are concerned about their well-being in the future, and 75 per cent are anxious about their ability to save and invest.
However, despite their concerns, only 33 per cent of Singaporean women feel confident about their financial situation as a whole, while only 27 per cent feel confident in their ability to save enough for retirement.
This highlights the significant gap between concern about their future finances and their confidence to tackle them, indicating the need to provide more resources and education to prepare women for retirement.
One primary cause of this may be the fact that many women shoulder a majority of caregiving responsibilities for children and elderly parents, which can take away time from their careers and impede their ability to save and or focus on learning how to invest for retirement.
Another reason is that often women take a less active approach to investment.
In the study we did, we found that less than a third of women here feel that investment is for them, compared to 43 per cent of men in Singapore.
And this lack of confidence is often due to an absence of financial knowledge. Only 29 per cent of women in Singapore feel confident in their financial skills compared to 41 per cent of men.
Instead, we found that to increase income in retirement, women in Singapore would rather reduce their expenditure or work for longer. However, this is not the most effective way forward.
A FINANCIALLY COMFORTABLE FUTURE
To truly achieve financial freedom and ensure women have sufficient retirement income, we need to empower women to pursue their long-term financial goals with confidence.
We found from the survey that women in Singapore tend to focus on what they have more control over to help increase their income in retirement, such as reducing expenses, working for longer, and topping up savings.
Gaining financial security is about steadily growing your assets while controlling your costs.
If women focus too much on the cost part of it, they will find it harder to achieve their financial goals as the cost of living goes up. Investing is hence a way to supplement their regular income and help grow their savings pot.
The fact is, when they choose to participate, women have a very sensible and successful approach to investment.
They tend to take a long-term approach to investing and are less likely to make impulsive decisions or jump onto the bandwagon of “hot” stocks.
What is needed is more awareness and support to support women achieve a financially stable future and retirement.
For starters, women can leverage financial planning programmes by government agencies like the Institute for Financial Literacy, which offers education and courses on investing and retirement planning.
The financial industry should also do its part to educate and engage women. We can do so by providing more educational materials and activities for women to gain more confidence when it comes to financial planning.
When it comes to investing for retirement and capturing growth and income opportunities, a long-term-oriented mindset is essential.
Women can consider a more diversified investment approach, such as managed funds, which provides access to a number of stocks that have been thoroughly researched, thus spreading out risks and returns over time, geographies, and asset classes.
A dynamic investment strategy can help investors achieve stable returns over different stages in life.
It’s never too late to start actively managing your money or investing your savings. It’s not about sacrifice or even the size of the amount, it’s about beginning your investment journey.
ABOUT THE AUTHOR:
Sabrina Gan is Head of Southeast Asia and Country Head of Singapore at Fidelity International, a financial services firm.
