Women and Investing

Five golden rules for women planning and saving for retirement

Saving for retirement is one of the most important financial goals to plan for during your working years. We outline the five golden retirement saving rules essential for securing a comfortable retirement.

19 Jun 2024

3 minutes

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Jaco van Tonder

Achieving a comfortable and secure financial position during retirement depends on a well-defined financial plan. While retirement planning can be a daunting task, following a set of guidelines can help make it more manageable. Jaco van Tonder, Head of Advisor Services at Ninety One, discusses fundamental rules for retirement planning and saving that have remained unchanged despite societal changes.

1 Make an early start

Beginning to save for retirement early on is crucial for a successful retirement plan. The sooner you start saving, the more time your investments have to grow. To ensure a secure financial future, following the first and most important rule of saving roughly 15% of your salary from the day you start working is essential. Although this may seem daunting, particularly for those just starting in their careers, Jaco reminds us that even a small amount invested during the first decade of your career - even if your salary is modest - can ultimately grow to comprise almost half of your retirement fund over 40 years.

2 Stay committed

Retirement savings is a long-term goal, requiring consistent commitment over many years. Saving for 40 years is the recommended time horizon to ensure you have sufficient funds for retirement. Staying dedicated to your goal and consistently investing in your retirement fund is crucial to achieving the desired result.

3 Don't withdraw from your retirement pot

One of the biggest mistakes people make regarding retirement savings is dipping into their retirement funds before retirement. It can be tempting to access your retirement savings for various reasons, such as buying a house or paying off debt. However, withdrawing from your retirement savings can significantly impact your retirement plan. The withdrawn money is no longer available to grow, and you may also face penalties and taxes for early withdrawals.

The remaining capital in your RA (at least two-thirds) needs to be invested in a living annuity or a life annuity. Your annuity will provide an income for you when you’re retired and will be taxed according to the PAYE tax tables.

4 Invest for the long term

Investing for the long term is key to growing your retirement savings. It's important to stay invested and continue contributing to your fund, as this will allow the benefits of compound interest to accrue. Saving for retirement means building a nest egg from which you can draw an income when you are no longer working – noting that your retirement years typically span 30 years or more.

5 Invest for longevity

While the rules for retirement savings remain the same for men and women, there is one key difference: women tend to live five years longer than men. As a result, women need to save more than men to compensate for this difference.

In addition to a longer life span than men, women also face unique challenges regarding retirement planning. Jaco states that households often disenfranchise women when it comes to financial decision-making. Suppose a woman has not been involved in long-term financial decisions and planning for retirement. In that case, she may find herself in a difficult position if her husband passes away, and she is left to manage the finances on her own.

Jaco recommends taking responsibility for your financial affairs as early as possible to mitigate this risk. Even if you choose to become a primary caregiver and give up your career, it is important to remain involved in financial decision-making and attend all meetings with the financial advisor.

A financial advisor can not only help with the math of retirement planning but can also help manage emotions and make sense of complex financial decisions. Having a relationship with a financial advisor early on can also be beneficial later in life when managing the stressors that come with retirement. By following these rules and working with a financial advisor, you can ensure a comfortable retirement for yourself and your family.



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Jaco van Tonder
Advisor Services Director

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