Super system failing women

18-Dec-2017

By Sarah Kendell

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Australia’s superannuation system appears to be failing female retirees, with women nearing the end of their working lives having just $80,000 on average in their super account, according to robo advice firm Six Park.

A recent white paper released by the group revealed that at the end of the 2014 financial year, women in the 55-64 age group were severely behind men when it came to accumulation of retirement funds, having $80,000 on average in their super compared to $150,000 for male pre-retirees.

While both groups were falling well short of the $545,000 needed for a single person to retire comfortably according to Association of Superannuation Funds of Australia statistics, the situation was worse for women who were paid 15 per cent less on average over their working lives, and 20 per cent less in the 45-54 age group when the bulk of retirement wealth was accumulated.

Six Park co-founder Patrick Garrett said while the government needed to formulate an appropriate policy response to deal with retirement inequality between genders, it was also important that women and their advisers take a proactive approach to building retirement wealth.

“We want to encourage women to take control of their finances as much as possible – policy changes can be years in the making and in the meantime women are losing precious time to make up the savings gap if they aren’t being proactive about savings and investment,” he said.

Getting women engaged in investing was likely to yield positive results, with the paper also pointing to research that revealed female investors achieved returns that were 0.4 per cent higher than male investors on average.

This was primarily due to women being more diligent savers, and less likely to regularly trade in and out of investments, meaning they were saving on brokerage and management fees.

“Studies show that women are often less confident than men about managing finances yet at the same time they have just as much if not more capacity to be successful investors,” Garrett said.

The firm advised female clients to start with a number of basic money management tactics, including setting up monthly savings through direct debit, setting long-term savings goals and investing into low-cost vehicles such as exchange traded funds.

“The key to remember is it’s never too late to start saving. On the flipside, remember that things won’t change if you don’t do anything,” Garrett said.

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