by Judy M McCutcheon
Is 25% a fair deal? Are the teachers being unfair in holding out for their rightful benefit of a retirement package that will afford them the ability to live a quality life during their retirement years? Will the retirement payout from NIS be sufficient?
Which gender constitutes the majority of the teaching profession? Data shows that regionally, the majority of teachers are women and the same holds true for Grenada. And while there may be little wiggle room for the gender pay bias to happen in the profession, the fact is that women, in general, are at a severe disadvantage when it comes to pay equity, and that disadvantage extends right into retirement. The pay gap that exists between men and women remains a significant issue. A recent study by the Korn Ferry Institute indicates that there are two different types of pay gaps. The first is the pay equity gap, which is the difference in pay for men and women doing the same job. The data shows that women make 5% less than men for jobs at the same level. The second gap is the average pay for men and women throughout the organisation. Here again, the data shows that women are making 16% less than men. This gap extends into retirement. This is a truly disquieting fact.
There is no denying that women need to plan differently than men when it comes to retirement. For one thing, on average women live longer than men, so at some point in their lives’ women must plan for being alone. Few women reach top positions in companies, and women are more likely to take a few years off to take care of their young children. The compounded effect of these “few years” off puts a significant dent in saving for retirement. Women have come a long way since the days of the industrial revolution, but are still being denied upward mobility because of gender biases. Why are more women not being groomed for the top leadership roles? Companies need to be deliberate in their actions to increase the number of women at senior levels; they need to ensure that women are given the right exposure, experiences, and mentorship. Unless companies become intentional in including women in their succession development strategies, instances of women in top positions will continue to be an anomaly.
Another issue as it relates to women and retirement is that few women actually know how much money they need to retire and live comfortably. One reason is that we don’t have a vision of what we want our retirement to look like. We know we want to spend time with the grandkids and maybe travel to a few places, maybe even go on a cruise, but few women intentionally plan what will happen during their retirement years. Knowing how you want your retirement to look and feel is an important factor in knowing how much money you will need. Based on scientific data, you are likely to live an additional 17 years more than your spouse, so how do you plan on living those 17 years. What about if you never marry or don’t have kids, to help provide that extra support? What about rising health care costs and an adequate pension fund? Many companies are still not offering pension plans, and out of those that do, some make it optional, and others only contribute just about 3%. What can you do with 3% of $2,500.00? How are you reasonably expected to survive on that income?
In addition to the gender pay gap, women are not big on investing; we tend to prefer investments that are safe. We don’t think we are savvy enough to invest, or that we need a huge amount to start investing. The fact is if you are already over 35, simply putting money away in the bank at 2% will not cut it, you need to start looking at alternative forms of income. It is important that you take the time to understand your finances, it’s not as fuzzy as you seem to think. Companies can assist in this regard by providing financial wellness education for their staff. We need to adopt a more proactive approach to money and planning for our retirement, let’s not make this business as usual. We also need to speak up as it relates to promotion and pay increases, do not settle for less than you are worth, remember what you earn now will have a profound impact on how you can afford to live throughout your retirement years.
This gap places a huge burden on society, and governments must make up this shortfall by providing for those who did not plan, could not afford to plan, or who did not plan adequately. This burden is redistributed to companies and working individuals through taxation after all the government must pay for this somehow. Therefore, companies should take the longer-term view and intentionally include women in their succession planning development strategies, seek to eliminate the gender pay gap and provide an adequate pension fund. Governments could weigh-in and help to supplement the NIS amount by providing an adequate pension fund so that the societal burden is lessened. Women, in the final analysis, it is your retirement, and you need to take charge. You need to ensure that you understand your finances, set goals for your retirement, and save as well as invest for the future you want. Remember, if you do not die young, you will get old, let’s plan for getting old.
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Judy McCutcheon is a partner in the firm Go Blue Inc, a Human Development Company. www.goblueinc.net
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