A research report released by the Association of Superannuation Funds of Australia in March 2014 said the average superannuation balance for males was $112,000 and for females was $68,600. The same report, titled An update on the level and distribution of retirement savings, said average superannuation balances at the time of retirement in 2011–12 was $197,000 for men and $105,000 for women.
Such figures are of great concern on two fronts. One is because they indicate that Australians are going to rely heavily on the age pension during their retirement. The second is because women on average appear to be worse off than men in the superannuation stakes.
Other societal statistics demonstrate the results of such issues. Melbourne Institute’s 2013 Household, Income and Labour Dynamics in Australia survey, for instance, showed the highest poverty rate for any family group was amongst single females over 60, with 35.8% said to be living in relative income poverty.
The reasons are numerous and include time out of the workforce, being paid less than men in some industries, reliance on their partner for financial affairs and more. But what are the solutions? What are the simple steps that can be put in pace to help combat the issue of women being underprepared for their retirement, financially speaking.
Get familiar with your finances
Knowledge is a powerful ally in the world of finance. Many decide money issues are simply too difficult to understand, so give them a lower priority. Other more urgent and timely matters take precedence over something as distant as retirement. But actually the basics are very simple, including the balances of your superannuation and savings accounts, how your funds are invested, whether they are working as hard as they should be, and the value of other investments in your portfolio. This can be as simple as a 10-minute financial check-up once a month, with more complicated questions saved for a meeting with an expert.
Make a family plan
If you are married or in a relationship, sit down together and discuss how to make the most of your combined incomes. If one earns more than the other, there may be strategies that can help boost the superannuation of one while offering a tax-offset for the other, or ways to split your superannuation contributions. It may require a conversation with a specialist, but a one-hour meeting to set a strategy could make an enormous long term difference to your retirement savings.
Start early and make tiny sacrifices
In the world of investing, nothing is more powerful than time. For women, who may face more employment breaks during their careers, it is important to begin loading more than the minimum into superannuation and investments early on, to take advantage of decades of compound interest. Salary sacrifice as much as you can, even if it is just $20 a week. Over time it may make a difference of thousands of dollars. That’s a lot of retirement lifestyle for a few less takeaway coffees each week.
Dare to dream
Use one of many web-based calculators, including those on the ASIC MoneySmart website, to figure out how a little change now can make a big difference later on. Seeing the calculated increase in savings retirement wealth is often enough, in itself, to inspire people into action.
Remember, it’s never too late
No matter what stage of life you are at, prior to retirement it is never too late to adopt new strategies to boost your super balance.
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