Imagine you’re sitting on a rock on a beach in Queensland. It’s dawn and you’re contemplating the day and your life ahead. Are you a timetable sort of person who has it all planned, or would you rather just wing it?
Planning ahead, in a financial sense, is far less about saving for diamonds or a holiday home than one might imagine. Those items are more in the realm of financial control, which we’ll deal with later.
Rather, planning ahead is defined in a financial sense includes behaviours like “addressing retirement income issues, using financial advisers and using insurance,” according to ANZ’s 2011 Financial Literacy Survey.
I’ve got you now, haven’t I? You’re riveted, eager to unlock the golden door of your future by “addressing retirement income issues?”
Frankly, most of us would rather stick needles in our eyes than “address retirement income issues”. since even the word “retirement” conjures the notion of twilight years in the doctor’s surgery grumbling about hysterectomies and dodgy hips. It’s little wonder so few of us want to think about it, for goodness sake.
Leanne Anderson, who runs a business renting out overseas homes, asked those gathered at one of our recent Kitchen Table events, “How many of us, male or female, are actually planning for the future?”
She went on to tell the group, to a silent chorus of affirmative nods: “Because I have been so wrapped up in the day to day, with what income is coming in every day, every week, every month; how I can afford the mortgage and so on; I’ve suddenly find myself at a certain point in life where I’m saying, hang on a minute. What am I doing about the future, when I might have no income? And I have no answers.”
Leanne also acknowledges that, “people just aren’t having these conversations, and super simply wasn’t part of the conversation when I first started working.” In fact, it was only our Kitchen Table Sessions that got her talking, in the first place.
However, we must plan for a time when we cannot work for a crust, either through choice or circumstance. Among the higher-income OECD countries, public pension spending is lowest in Australia, Canada and Ireland,and changed little over the period 1990-2005. According to an OECD report on pension reform, Australia has “relatively favourable demographics, but also has relatively small public pensions and relies heavily on private pensions to support people’s income in old age.”
It’s up to us, people.
Even though super is clearly not the only way to build wealth and each person should seek information and advice for their own circumstances, the fact is that super has a number of significant (and legal) things going for it. According to the ANZ study:
• 79% of Australians surveyed, agree that super is a good way to “make me save;”
• 78% agree that “compulsory super is forced savings, I barely notice it”;
• 82% of women agree with the statements above;
• Women are 14% more likely to say their annual super statements were too difficult to understand
Wait, does that last point suggest women don’t bother to read super statements properly because they’re too complex? I don’t buy that. The truth is they’re so DULL and lately the numbers have not been all that pretty either.
I propose the real issue is not that Super is actually difficult to understand, although there’s a whole industry and tax department seemingly dedicated to making it as complex as possible, but more that it seems abstract and irrelevant until it’s too late. She’ll be right. Right?
The general lack of interest and continued myopia is perhaps not helped by the numbers released in July last year by the Organisation for Economic Co-operation and Development (OECD), which showed that Australian super funds were the third-worst performing retirement funds among the more than 30 member countries from 2008 to 2010 – only Portugal and Estonia did worse and one of those countries is going broke.
Part of the solution to this problem, and it is a serious problem; lies within ourselves to correct our own myopia, the fact is, women are twice as likely as men to retire in poverty. I also call on the industry and institutions who supply the advice, the products and reap the profits on the tax and growth benefits of our self provision to step up and work harder. The current situation is simply not good enough.
Is Super difficult to understand, really? What do you believe needs to change to encourage women to step up and take control of their future wellbeing?
Sara Lucas is an Authorised Representative of Fitzpatricks Dealer Group Pty Limited ABN 33 093 667 595 AFSL 247429
This information is of general nature only and is not intended as a personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. We recommend you consult a professional financial adviser who will assist you.