Leading up to retirement, the super balance for women could be around 25 per cent lower than for men, according to the Association of Superannuation Funds of Australia (ASFA).
The analysis, released on Wednesday, revealed that this gap begins to widen well before retirement age, with the median balance at age 30 for both men and women being $32,000 and $28,000, respectively.
“A key reason for the retirement savings gender gap is women taking time out of the workforce, or working reduced hours, to have to raise children,” explained Glen McCrea, ASFA deputy chief executive.
“Compulsory super should be extended to paid parental leave (PPL), including the government’s PPL scheme,” Mr McCrea added.
ASFA additionally advocated for a “super baby bonus”, whereby the government would deposit $5,000 into the superannuation account of women upon the birth of a child.
Looking beyond this, a recent report from Findex has separately found that financial advice can have a big role to play in empowering Australian Gen X women to save the funds needed to maintain a good standard of living after leaving the workforce.
Namely, a woman earning $100,000 per year in her mid-30s could increase the value of her net financial assets to $664,000 more than without accessing financial advice, according to the firm.
“Our report findings show that people who seek professional financial advice are three times more likely to say they understand what they need to live comfortably in retirement, compared to those who don’t,” Findex said.
Using the previous example of a woman aged 35, earning $100,000 a year and accessing wealth management advice in her mid-30s, the report’s modelling found that the $664,000 benefit of advice drops to her being $192,000 better off in retirement if she accessed advice at 50 instead. Essentially, the 15-year head start was worth $472,000.
Findex, similarly to ASFA, noted that maximising super contributions could be a main driver for women being able to achieve a comfortable retirement.
Australians fall short of ASFAs expectations
ASFA additionally observed that, despite the persisting gender gap, both males and females are on track to having a retirement balance significantly less than what is required for a comfortable standard of living, assuming that only compulsory contributions have been made.
While the necessary balance at various stages of life vary, the association has previously said that the amount needed to achieve a comfortable retirement at age 67 was $595,000 for a single person and $690,000 for a couple.
According to ASFAs latest data, while those on a wage of $90,000 could potentially reach this, it would require super guarantee (SG) contributions at the rate of 12 per cent of wages for around 35 continuous years.
For an individual on $65,000 a year, SG contributions at 12 per cent would be needed for around 45 years.
However, the association noted that the median balance for both male and females at the age of 65 sat between $202,000 and $216,000.
This fell concerningly short of ASFAs benchmark for achieving a comfortable retirement at that same age – $560,000 for someone with a $90,000 salary, and $565,000 for someone with a $65,000 salary.
I agree with these ideas but it takes more than just financial planning for women to make the best of the rest of their life, especially from midlife. Longevity planning encourages people to develop a holistic view of their future, enabling them to co-ordinate their health, financial and estate planning. With an increasing average healthy lifespan, women can review and plan their choices for meaningful work which can be purposeful, financially beneficial, socially rewarding and good for you, and well beyond traditional ‘retirement’. Of course, men can do so too.