‘Women and super – it’s time to plan ahead’

Ronald Pratap | June 14, 2017

Gender equality in enshrined in Australian law, however one area where women are falling short is their ability to save for retirement. So much so, in fact, that at around $190,000, the average super balance for women at retirement is around two-thirds the amount of men[1].

There are many reasons for this, including the gender pay gap and the tendency for women to take time out of the workforce to raise a family. When women do return to work often it’s on a part-time basis, in lower-paid jobs or they have missed out on promotions.

Blessed with longer lives – around three years on average for those turning 65 this year – women also face the extra financial hurdle of needing more savings, if anything, to cover their full retirement.

Closing the gap
Despite taking positives steps to boost their retirement savings when they do return to the workforce, women are often too conservatively invested to close the retirement gap to men, according to a global survey of more than 34,000 investors by investment firm, BlackRock[2].

The survey found that on average, women keep 68 percent of their portfolio in the relatively safe investments of cash and cash equivalents compared to men who allocate 59 per cent of their portfolio to cash.

Women were also less inclined to take risks with their investments with 28 per cent of women saying they would take on higher risks to achieve higher returns, compared with 45 per cent of men.

The legacy of men typically making household financial decisions has also fostered a gap in financial literacy, impacting the confidence of women to make positive financial decisions. For women aged 55 – 64, just 46 per cent are interested in investing, while among Gen Y women the figure is just 36 per cent. Women, instead, tend to focus more on savings related behaviours such as avoiding overspending and managing debt, the survey found.

The good news is that, despite these challenges, the survey uncovered several key habits of women who were on track to meet their retirement goals. These include:

·        ·       spending time on their investments – up to seven hours per month

·        ·        making retirement saving a priority

 ·      ·       diversifying their portfolio, holding more shares and less cash

·        ·        seeking financial advice

Tips for healthier super
No matter whether you’re a man or a women, here are some steps proactive, positive steps you can take to build and protect your financial security.

·         Salary sacrifice a little extra into super, remembering that it’s taxed at up to 15 per cent for most people, a little can go a long way.

·         Take advantage of the Government super co-contribution. If you earn under $51,021[3] and make a post-tax contribution of $1,000 or more, the Government may chip in up to $500.

·         Make sure the investment option you have in your super is the right option for you. Looking at this early could help to give better long term outcomes.

·         Consolidate your superannuation accounts into one to save on fees and insurance.