Retirement provision Study: Women in particular should save privately for retirement

If you want to maintain your standard of living in old age, you need to save privately. A new study by UBS shows how much of your income you should put aside. According to the study, women in particular should make greater efforts to save.

Some countries are able to offer their populations a comparatively more generous benefit promise, as shown by the "International Pension Gap Index" published on Wednesday, which analyzes the mandatory part of 25 pension systems worldwide.

In Amsterdam, for example, no private savings are required, while at the other end of the scale in Tokyo, 93 percent of wages would have to be saved. This is not feasible, according to UBS. With an average required savings rate of 28%, Zurich is in the middle of the 25 cities analyzed.

"Jane" as a stress test for the pension system

UBS uses the example of a 50-year-old woman who has hardly put any savings aside up to this point. At the same time, the authors of the study assume that the single person named "Jane" earns a standard median wage and rents a house in a middle-class neighborhood outside the city center.

A "Jane" represents a kind of stress test for any pension system, explained UBS. This is because women often earn less than men and the cost of living is often higher in large cities. In most cities around the world, it is therefore necessary to set aside private savings in order to ensure a certain standard of living after retirement, UBS concludes.

In addition, women are more likely to interrupt their careers and work part-time, for example to look after children. This leads to lower wage growth, fewer pension entitlements and lower savings. Women also tend to live longer than men.

Investing instead of saving

"As a result, women generally have fewer resources to finance longer retirement periods," explain the authors of the study. This means that the required savings efforts of women are generally higher than those of men.

While saving is a necessity, investing can help considerably according to UBS, even if it is associated with risks. In Switzerland, for example, a diversified portfolio of bonds and equities produces a better financial result than holding cash in nine out of ten cases.

SDA