What women risk when it comes to retirement

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May 31, 2022
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Article published by RJS Wealth Management Pty LtdThe status of women in twenty-first century Australia is better than ever before in history. Women in 2016 are better educated, paid more and hold more high level corporate positions than ever before. But in the face of such progress there is still a significant salary gap (24{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} at last calculation according to the Workplace Gender Equality Agency –WGEA1). This is worrying in itself, but there are serious knock on effects too. Australian women at retirement age are incredibly vulnerable, low superannuation balances mean they risk a limited lifestyle during their retirement and there’s even a chance their savings will run out entirely. It’s a tough truth to face, and there’s no clear solution, but the situation is not completely hopeless. Every woman can choose to take control of her superannuation balance and create her own financial security. They just need to be educated and motivated to do so.[caption id="attachment_1164" align="aligncenter" width="640"]

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Don’t let this be you![/caption]So why the big difference in superannuation for men and women? The main reason for the inequality? Mothers are the parent most likely to take time out of the workplace to raise children, and once they have done so, they’re more likely to return to work part time. This cuts their earning capacity significantly. And even if they work full time, there’s the salary gap: across every industry, full or part time, men are paid more than women1. So even though a women’s average longer life expectancy means she should actually be aiming for more savings than men, average super balances as at 2015 for women were only slightly more than half the average for men2.In fact, based on current life expectancy, 57{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} of women can expect to outlive their superannuation savings3.The brutal truthA 25-year-old woman, today, will earn about 50{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} less over her working life than a man the same age4. If she leaves work to bear and care for children, returns part time and suffers under the salary gap, she has not the slightest chance of ending her working years with anything like the nest egg her male counterpart will have put aside. Of course, many women will choose to remain childless, or leave work for the bare minimum of time before returning to full time work, but even for them, the salary gap is showing no signs of vanishing. Vastly different balances for a woman and her male colleague, come retirement day, are virtually guaranteed.[caption id="attachment_1165" align="aligncenter" width="640"]

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This is more like it.[/caption]So what’s a girl to do? For women, it’s incredibly important to be aware of the importance of superannuation. Many avoid thinking about it at all, just over half of women surveyed by the government in 2007 find dealing with money stressful and overwhelming5. A welcome start would be to educate young women on the need to keep topping up super throughout their working lives, and encourage them to keep on top of superannuation accounts as they change employers, combining them for ease of management and the advantages of compound interest.One of the most important factors that will influence women’s superannuation savings is greater workforce participation rates, which, according to the ABS6 are improving. According to the Workplace Gender Equality Agency (WGEA), pay equality is also improving among younger people1.No ifs, no buts, every women needs superannuationThere is certainly also the argument that a man, having had his children born and cared for by their mother (his wife) for many years, will share his superannuation with her, as they retire together (and ride off into the sunset). This will be the reality for some.But many other women will do retirement on their own, for whatever reason, (which are their business and not ours). And for the primary breadwinner (of either gender) to put aside enough super to support a couple adds financial pressure to the relationship. This can be alleviated by making it a shared goal, where both partners are doing as much as they can to maximise their super balance.Educate, inform and prepare for actionWomen need to be targeted and educated about superannuation throughout their lives. They require information about the risks they could face as their retirement approaches, and the opportunities they have to address any superannuation shortfall.Infographics like this one3 recently released by MLC, can be used to kick start a conversation, and bring about some active retirement planning. At this point of realisation, a financial planner is the ideal person to speak to. They’ll suggest the best ways to increase super contributions, introduce salary sacrifice or even alter risk profiles within their fund. It’s never too soon to start either.Right now, the statistics are saying that a whopping 74{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} of women feel unprepared for retirement9, so the most important thing for women in today’s Australia is to become active about their superannuation, get professional assistance, identify an achievable goal to work towards, and start getting on with it.Do you feel like you might need some help preparing for retirement? RJS Wealth Management can help. Call us on 1300 256 526. Sources:1 Australian Government, Workplace Gender Equality Agency, August 2015 https://www.wgea.gov.au/research-and-resources/fact-sheets-and-statistics2 ASFA Super Statistics May 20153 MLC Infographic on the gender gap in retirement Solving the gender gapAustralian Financial Attitudes and Behaviour Tracker5 Financial literacy – women understanding money, Australian Government, 20076 ABS 4125.0 Gender Indicators Australia January 2013This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

June 1, 2022

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