The average 60-year-old Australian woman would need to work an extra 25 years in order to retire with the same superannuation account balance as her male counterpart.
The Westpac Women & Retirement Readiness Report, released yesterday, shows a $121,200 gap between the median super account balance for women and men ($108,900 and $230,100 respectively). This means a female earning an average wage of $51,200 would need to work until she is 85 to start her retirement on a level financial playing field.
The Westpac director of women's markets Larke Riemer says as daunting as that sounds it is important to be pragmatic.
"I don't want to be an alarmist, but I want to make sure people, especially women, know the reality so they can make necessary plans, adjustments and investments now to help secure their financial future," Riemer told Women's Agenda. "The reality is that all Australians – men and women – need to dedicate more time to planning and saving for their retirement. You want to "live" not "exist" after you stop working – and we are all living a lot longer."
The report examined the circumstances of Australian women aged between 40-65. Half of the respondents expected to have saved more in their superannuation fund, savings accounts and investments at this point in time to fund their lifestyle in the years beyond work.
Slightly more than half regret not having planned better as they approach retirement, realising that they won't be able to maintain their current lifestyle. These women are encouraging their own daughters to take action sooner rather than later, with 40% advising them to "start saving now".
Riemer says when it comes to your financial future it's important to choose action over inaction.
Seeking professional advice, considering your retirement goals, establishing a budget to determine how much money is needed for your retirement, exploring tax benefits suited to you and identifying options to build wealth are all important factors to consider.
"Minimum contributions simply aren't enough and retirement seems like a long time away when you are in your 20's or 30's – but it creeps up faster than you think," Riemer explains. "Women in particular need to put a plan in place as early as possible. As primary carers, they often take career breaks, receive less pay than men and return to work in a part-time capacity. It's these unique factors which impact women's superannuation balance down the track."
Riemer is personally familiar with the circumstances that can impact a woman's financial future.
"As a 61-year-old woman myself who has spent the past 21 years rebuilding my own super balance after divorce, the importance of taking matters into your own hands is something I reinforce to my adult daughters often," she says.
"I also want to make it clear that every dollar really does help in the long-run, so even if you can only contribute an extra $20 per week to your super account, it's worth it because it will make a difference to your long-term lifestyle."
Tips for women aged 40-65 and nearing retirement
- Be clear on your retirement goals
It's important to understand what you want out of retirement. Different desired outcomes require different amounts of money.
- Establish a budget
Determine how much money is needed for your retirement, and develop a budget that supports your retirement (including fundamentals for living such as groceries, medical expenses, etc), as well as the money necessary to fulfil your goals.
- Retire your debt before you retire
Don't go into retirement still owing money. This will unduly bite into your retirement funding.
- Explore tax benefits
There are considerable tax benefits to contributing more to your super, especially for women over 60, so this is something that should be explored and considered in your planning.
- Identify the best ways to build wealth
Build a portfolio of good assets that support your financial goals. As you get closer to retirement, you can consider increasing your contributions your superannuation.