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Retirement and the double x chromosome

Sunday, June 29, 2014

Last week, the Sunday Business Guardian featured a CNBC article on women and the challenges they face at retirement. The piece found that women were more likely to retire less comfortable than men simply because they were unable to save or invest as much throughout their careers and were more likely to outlive their pensions.



The following reasons were given:
• Statistically, women just live longer than men. On average, there is a life span difference of five to 10 years favouring women. (Time, August 2008)
• Women were likely to work at least 12 years less than men owing to the fact that they took time off to take care of young children and retired earlier to care for elderly parents
• Women were more likely to pursue employment that helped with work/life balance. 
• In the US, employers tended to offer fewer employee benefits like pensions to women who chose more flexible work arrangements.
• Even though the income gap between men and women is closing in all sectors, men still out earn women. The US Census Bureau placed 2012 median earnings for men at US$49, 398 versus US$37,791 for women.
• The number of single women, divorced women and households headed by women is growing in the US.


The article advised that women should be setting up a safety net to cover their future medical expenses. It also advised that women adjust their savings/investment goals to reflect their realities; if they had not retired yet, but realised their expenses would likely outstrip their income, they should work longer. If they had already retired, downsizing their standard of living was an option, as well as acquiring higher risk, higher yield investments such as stock as opposed to annuities.


So the questions arose: locally, are women finding it harder to make ends meet during retirement? What were the factors that applied to women and their financial habits in the T&T context and what steps could women take to protect themselves from a decline in their post-retirement standard of living?



The local situation
According to the  2013 CIA World Factbook, in T&T the average life expectancy for a man is 74.1 years, for a woman, it is 78.1 years. Some estimates place this figure at 81 years. Dr Jennifer Rouse, director of the Division of Aging in the Ministry of the People, said that of the estimated 300 centenarians in T&T, the majority are women.


In a population pyramid from the CIA site, the generational cohorts 50-54, 55-59 and 60-64, or people at least 10 to 15 years away from retirement represent one of the largest segments in the country (See Pyramid). In all three cohorts, women represent either half or slightly more than half of the population. Over 65, women begin to outpace men in longevity. Dr Rouse also said more women—through divorce, widowhood or unmarried—are heading into their later years alone.


To add to this, local women are finding themselves in the position Dr Rouse referred to as the “sandwich generation.” Many of them were fully occupied and stood the financial cost of care for their elderly, but were also finding themselves having to meet the needs of their growing or university-aged children, leaving few opportunities for them to save for their retirement, Rouse said. 



What women can do to protect themselves
Sharon Christopher, deputy CEO at the First Citizens Bank, said despite the fact that many professional women earn more than their partners, women were still relying on men to handle household finances. “Even in today’s world, there are a lot of women who don’t know how much their house is mortgaged for. Their name is on the mortgage deed, but they don't know if it is being paid. Women need to take more responsibility for themselves.”


Part of taking responsibility, Christopher said, was starting to think about retirement from the first day of work. She advised women to have a plan for their money. “You always make sure that you have emergency funds. You put a certain amount into investments and a certain amount into savings.”


Christopher also thought women needed to become better negotiators during their work lives. When coming to salaries for equivalent positions in the professional world, she said as a rule, men tended to ask for what they wanted, while women asked for what they thought they deserved. “Women don’t place the same value on themselves and don’t think they deserved better.”


She has a fairly unorthodox solution. When negotiating compensation packages, Christopher told women: “Ask men (in similar fields). If you do not know someone you feel comfortable asking, add 20 per cent to your asking price.” 



The First Citizens executive also acknowledged that women were far more risk adverse than men, which caused them to gravitate toward safer investment instruments and not to the ones that could actually earn higher returns. She said women must be in the mindset of thinking how best to create wealth for themselves. One way to do this would be to acquire multiple skills that they can leverage to improve one’s financial position. 


She illustrated the point by drawing reference to women who made their living through administrative skills while working professionally, but turned to baking goods for sale on retirement. Even when working formally, a woman could have alternate streams of income, which ultimately would help build her nest egg for retirement. Christopher herself has already taken several steps to ensure the security of her own retirement, which she told the Sunday Business Guardian was mandatory at the bank at age 60.


She said she has no significant debt and is planning to launch herself into her second career, what she described as her “true passion” that of leadership development for women. Dr Rouse also admitted she was into her second career. 



She left the pensions department of BWIA as an assistant accountant after decades of service and moving up the ranks in 1995. She then went on to do her Bachelor’s degree in Research Work and Africana Studies at age 44 and was able to complete her Masters and PHD in Public Policy, within the next eight years. 


She urged women to take care of their health. She said women's lifestyles had become increasingly sedentary. She said this led to an increase in chronic non-communicable diseases like diabetes and hypertension, which were expensive to both the State and the individual to treat.


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