Retirement: Why Women Need To Work Harder Than Men To Build Their Retirement Plan

Women in Singapore have made great strides towards gender equality. According to the Global Gender Gap Report 2020 by the World Economic Forum, Singapore ranked 5th in the East Asia and the Pacific region, ahead of Japan and South Korea but behind New Zealand and Australia.

As younger generations of women gain more access to education and career opportunities, you also become more empowered to achieve greater financial independence. Yet, there is one area women may lag behind their male counterparts in Singapore: planning for their retirement.

Your retirement is no less important than men, and often more important. Hence, there is an urgent need for you to understand the concerns and equip yourself with the right financial skills.

1. Women are living longer

Singaporeans enjoy the world’s longest life expectancy, at 84.8 years on average, thanks to advancements in healthcare and better standards of living.

However, while you have a life expectancy of 87.55 years, men in Singapore have a life expectancy of 81.94 years. This means that, on average, you are expected to live 5.61 years longer. This is certainly not bad news by any measure, but it also means there’s a good chance you will outlive your husband and face financial hardships alone in your senior years.

Furthermore, as males tend to pass on earlier, they likely face the onset of a medical condition sooner as well. Retired couples may have to dip into their shared retirement nest egg for such unexpected medical bills, potentially leaving you with a diminished retirement pot in your old age.

2. Women tend to face more career disruptions

There is no doubt that Singaporean women are as educated and talented as men, if not more. Empirically, this has translated to women increasingly supporting the local labour force, with participation rates increasing from 48.8% in 1990 to 61.1% as at 2019.

Looking deeper into the statistics, you find that both males and females have a labour force participation rate of over 90% between the ages of 25-29 years. However, females start leaving the workforce after that, with a participation rate dropping to 81.2% for those aged 40-44 and 71.3% for those aged 50-54. Meanwhile male labour force participation rates hold much firmer, remaining above 93% even at the 50-54 age group.

The gender gap in the local labour force only emerges when women enter their 30s, likely the age when you may choose to engage in temporary work or stop work completely to take care of young children or elderly relatives. This is further evidenced in a study by AIG Life in the UK, which also found that three in four women are the main caregivers for children and expect to look after elderly relatives.

In Singapore, CPF contributions from your monthly salary forms a retirement safety net in your old age. Staying out of the workforce for any period of time will not only erode this safety net, but also leave you with less or no income to continue growing your investments.

3. Women may earn less than men

According to the Labour Force in Singapore 2019 report, the median gross monthly income from work for men was $3,967. Women earned a median gross monthly income of $3,250, or 18% lower than men. Over an extended period of time, this leads to less CPF contributions and less funds to invest for your retirement, and can lead to you feeling less prepared for the future.

Previously mentioned, women are also more likely to take time off from work incurring what is known as the “childcare penalty”. Apart from not earning a salary and being able to build your retirement savings while you are out of work, this tendency to leave the working world behind or engage in work that enables flexibility to care for family members is also likely to have consequential effects on your career progress and ability to command a better pay.

4. Women tend to score lower on financial literacy and are not key decision makers in financial planning at home

According to the Financial knowledge and portfolio complexity study by the Singapore Management University (SMU), women were found to be less financially informed.

Worryingly, an HSBC study in 2018 also found only 1 in 5 women pitched their financial knowledge as better than men, while 41% of women said they did not know how much they are saving for later life or haven’t started saving yet.

This is just another reason why you need to work that much harder than men to ensure you have a comparable retirement plan in place. This does not even answer the question about whether that retirement plan is going to be enough. The same HSBC study also reported 7 in 10 Singapore women worry about affordable healthcare after retirement while 54% believe they will struggle to cope financially if their partner passes away.

Make your future a priority

While you may feel as though the odds are stacked against you, you owe it to yourself to understand how you can take charge of your finances better. With greater access to education and income potential, Singapore women start out in a good position to put in place plans that will financially secure their retirement.

Living longer and caring for loved ones should never be seen as a disadvantage. Rather, your need to understand the adverse scenarios this could lead to and take a more active approach in growing your retirement nest egg. One simple way to start is working hand-in-hand with your partner to implement a sound retirement plan instead of letting them take care of it on their own. This way, you can adjust plans to cater to potentially outliving your partner or continuing to build your retirement nest egg even while you are outside of the workforce.

You can also make use of online resources to improve or bridge any gaps in your financial knowledge, including Singapore National Financial Literacy programme, MoneySense, learning how to make your savings work harder, starting to build your retirement nest egg early or speaking to a financial advisor can all help navigate any uncertainties surrounding retirement planning.

After all, everyone deserves to have peace of mind as they grow older by feeling financially secure and independent. When it comes to retirement, it’s important to start the journey with the destination in mind and to understand that it is never too early or too late to start planning.