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Women’s retirement planning: Invest in your future self

20 May 2024

By Emilie Paquet, FSA, and Vladyslav Kyrychenko, Ph.D., CFA

Women face unique challenges compared to men when planning for income in retirement: women face the challenge of potentially taking a career break to have children and are typically more likely than men to give up full time employment to care for family members. These disruptions may often increase shortfall risk, which is exacerbated by women’s longer average life spans.

Starting date—what effect may this have long term?

When you start accumulating investments for retirement has a significant effect on whether you reach your income replacement target and, therefore, affects your retirement savings shortfall. In aiming to quantify this risk, we analysed varying outcomes based on different starting ages: 20, 30 and 40.

If you start retirement contributions at age 30, instead of 20, our analysis shows that your shortfall risk is 38%, which is a high number. Starting 10 years later than that—age 40—pushes your shortfall risk up to 54% if you’re living in Malaysia, which is significant.

Effects on shortfall risk when delaying investing for retirement

Source: Multi-Asset Solutions Team, Manulife Investment Management, May 2024.


Importantly, this risk remains high even if you ultimately set aside the same total contributions. This is because the early benefits of compounding cannot be caught up later. Consider the following hypothetical scenario:

Mei and Lu both contribute the same amount to their retirement investment—MYR240,000—and receive the same annual growth rate of 5%. However, Mei delays her start date by 10 years. Although both women’s contributions are the same, Mei’s delayed start means she doesn’t benefit from the early compounding that gives Lu over MYR650,000 more by retirement.




MYR240,000 total contributions over 30 years from age 25 to age 55

MYR240,000 total contributions over 20 years from age 35 to age 55

Growing at 5% per year

Growing at 5% per year

End value: MYR558,086

End value: MYR416,631


Lu’s total accumulation is 34% higher than Mei’s.

Measuring the effects of early compounding

Source: Multi-Asset Solutions Team, Manulife Investment Management, December 2023. The above illustration does not depict an investment in any Manulife Investment Management portfolio and is a hypothetical example for comparison purposes only. Rates are subject to change. This illustration does not reflect the effect of asset charges and account fees. These fees would reduce the performance shown in the above illustration. The investment return and principal value of an investment may fluctuate so that distributed investments may be worth more or less than their original value. The illustration assumes: (1) no initial lump sum, MYR8,000 invested yearly for 30 years; (2) no initial lump sum, MYR12,000 invested yearly for 20 years. (3) no withdrawals. All hypothetical assumptions include a compound annual growth rate of 5%, accrued yearly. There are no guarantees that the results shown will be achieved.


In the next series, we’ll explore the longevity risks that women are facing: no-one has control over is how long we will live. Women often face average life spans longer than men, which puts them at higher potential risk of not reaching their target for income in retirement.

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The above information has not been reviewed by the SC and is subject to the relevant warning, disclaimer, qualification or terms and conditions stated herein. Manulife Investment Management (M) Berhad Registration No: 200801033087 (834424-U) (hereinafter referred to as “Manulife IM (Malaysia)”) is a wholly owned subsidiary of Manulife Holdings Berhad and holds a Capital Markets Services License for fund management, dealing in securities restricted to unit trusts, dealing in private retirement schemes and financial planning under the Capital Markets and Services Act 2007. Manulife IM (Malaysia) operates under the brand name of Manulife Investment Management which is the global wealth and asset management segment of Manulife Financial Corporation. Information posted herein is intended for the exclusive use by the recipients who are allowed to receive it under the applicable laws and regulations of the relevant jurisdictions. Certain information in this post may contain projections or other forward-looking statements regarding future events, targets, management discipline, estimates or other development trends of financial markets. There is no assurance that such events will occur, and actual results may be significantly different from what is contained herein.

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