Preparing financially for retirement can cause women anxiety and stress, but a comfortable and secure retirement is within reach. This Wealth With Sophia column looks at how to maximise income and invest in you to set yourself up for your best future
What do you envision your life to look like once you’ve stepped back from work? Are you living in a sunny country? Are you running around the garden with your flock of bichon frisés? This picture no doubt looks different for everyone.
However, for most women, retirement can be a worry-inducing word. Women live longer and retire with 25 percent less wealth than men. Since women currently take on the lion's share of unpaid child- and eldercare and often take career breaks, women often don’t feel financially positive about their retirement. It’s time to rewrite this anxiety with a plan of action so we can all live our best lives.
See also: How to navigate money matters and build healthy financial habits for stronger relationships
What do the numbers tell us?
A study from 2023 shows that women in Asia Pacific are less confident about their retirement life—42 percent of women versus 51 percent of men. According to the same study, women in Asia Pacific expect to retire at 63 years of age on average. Given average life expectancies for women are 85 years of age, women in this study anticipate a period of 22 years that retirement funds need to cover. Women are worried about their retirement savings, with almost half of women in this study believing that their retirement will only last for 20 years. There is a risk that women will outlive their retirement savings.
But before we allow retirement anxiety to go into overdrive, it’s important to remember that a comfortable and secure retirement is within reach, and there are some key steps you can take to achieve it.
Take stock and figure out your number
The first step to start planning for your ideal retirement is to have an honest money date with yourself and decide what your life will look like in your retirement years. Be as detailed as you possibly can. What does your life look like across your family, your health, your living situation and your personal development? These answers will need to feed into these important questions:
- “How much money do I need, and when will I start needing it?”
- “How much should I be saving today so that my future is secure?”
Essentially, you need to be able to come up with your number. There are a few methods and retirement calculators online which you can use to determine this number. Retirement experts generally settle around using your peak salary (or your best estimate of what this number could realistically be) and multiplying this by between ten and 12 as a starting point for a nest egg that you can aim to save for. Calculate what your number looks like to get started on your retirement planning. You’ll quickly see if there is a gap in your current retirement savings that you need to address. However, keep in mind that women earn less so you may need to factor in additional savings or investing goals to make up for the gender pay and investing gaps.