The superannuation reality check we unfortunately need

The superannuation reality check we unfortunately need

From divorce to endless travel to ignoring the paperwork, we learnt some cautionary tales when Women’s Agenda sat down with a small group of women in their mid-forties to talk superannuation, via a roundtable supported by Human Super.

Melissa’s* (then) husband dropped the bombshell that would change the course of her life and future just days before they were due to settle on a beautiful new home in Sydney’s Balmain.

He told her the lifesavings she’d personally acquired from the sale of a property in New Zealand, along with a savings scheme she’d diligently been contributing to since the age of 21, was gone.

They would have to forfeit the deposit, the home, everything. In just 12 months he had managed to gamble the lot.

It was more than $600,000.

Melissa went into survival mode. She contacted her solicitor, the real estate agent. She was done with the marriage, but was clearly now considering what would happen to her future – especially as the divorce would see the division of their existing assets, and possibly even cost half her superannuation.

“I wasn’t angry. I was in a state of shock,” she says. “I didn’t even know he had a problem with gambling.”

Melissa’s money story has recently turned the page to a positive chapter – which I’ll get to shortly. But the sad fact is that for many women, a sudden life altering event – a divorce, separation, death, illness, marriage or indeed a bombshell like the above – is all too common. And there is often no recourse out of the situation, especially when it comes to the savings you need to retire.

All the women who partook in the roundtable were smart, savvy, childfree and had worked most – if not all – of their adult lives.

They all shared their concerns about retirement: not one felt confident about their superannuation. All indicated it was a source of anxiety – although it hadn’t always been, and they conceded some of the circumstances they have found themselves in could have been somewhat avoided.

Women and superannuation

This year, we’ve seen multiple studies regarding the significant superannuation gender gap between men and women, indicating women are projected to retire with around half the savings of men.

There are multiple reasons for this being the case – everything from the gender pay gap (currently at 15.3%) to career breaks, caring responsibilities and long periods of part time work.

But what really matters is the outcome for women: Less superannuation means not only less freedom in retirement, but also more risk of retiring into poverty.

According to the Association of Super Funds Australia, a “comfortable retirement” requires $43,695 a year for a single and $60,063 for a couple, offering a standard of living that includes leisure and recreational activities as well as freedom to access goods, services and travel.

But the average woman with super is currently now retiring with just $290,000 in total, and we’re living 5% longer than men. That’s not even enough for a modest lifestyle, requiring $24,270 a year for a single and $34,911 for a couple.

Almost 30% of women who retired in the past four years had no superannuation at all, according to the latest HIDLA study.

We partnered with Human Super for this discussion to determine some of obstacles that arise for women who may otherwise think they are on track for retirement and progressing comfortably. A number of similar discussions had been held by Human Super beforehand, with some grave insights. Many women involved in these discussions were in the dark about the balance of their superannuation, the unique costs of their chosen super fund, and even which fund they were with.

In this particular discussion, all of the women knew their current balances – mainly because in the last few years they had experienced circumstances that required them to know. Indeed, some of the stories heard may serve as a cautionary tale for women.

Melissa handed control of her finances to her husband after they were married. She concedes this was her biggest lifetime mistake with money. She now urges all women to maintain control of their finances and never relinquish that responsibility.

Spending it

Another woman who shared her story was Alexis, who has been enjoying a fantastic career in finance all over the world. She recently returned to Australia after living in London and New York for 12 years. Single until her late thirties and recently married, she’s one of those women you’d think would never come into an issue with her superannuation.

But along with her husband, she’s not confident she’ll have what she needs for the kind of retirement she once expected.

Alexis is particularly concerned, because while working overseas she didn’t make contributions to her Australian super, nor has she rolled over what she contributed towards the pensions system in the UK.  The paperwork arrived, but she didn’t get around to filling it in. She also concedes she’s failed to save money well, especially living and renting in some of the most expensive cities in the world.

“We recently had a discussion about the growing rate of female homelessness,” she says. “I’ve been thinking a lot about that because that could be me. I don’t have any children. It’s my own fault that could be me because I’ve spent too much money and I haven’t been focused on this.

“If my husband died or we split up and I lost my job in ten years or whatever, I could be in trouble. The difference is, I haven’t had a background where I gave up a job to have kids or gave my financial independence to my husband. I haven’t been a victim of domestic violence or experienced a divorce where I’ve lost everything. I have no excuse. I’ve put myself in this situation and so now I need to do something about it.

“But we like to think homeless women are from those backgrounds, but really it could be any of us because we have not been focused enough on this.”

A third woman in the room was Didi. She’s thorough with her research, always doing the due diligence to get the best possible deal on everything from energy bills to health insurance and working with a financial planner.

Having grown up in a family where it was custom to put at least 10% away in savings, Didi said she too has been doing this for decades. The problem is that she’s been spending the savings on her passion: travel.

Now, travel, renting a great place and even spending money on shoes or clothing, isn’t a matter of money being wasted. Often these are experiences, things you reward yourself with, things you may feel a deep emotional connection to. The problem lies with not putting enough money away to save for a time when you may not be earning an income.

The other problem is when you feel you’ve lost control of where your money is and what it should be doing for you.

“I’d like to understand superannuation better,” Didi tells the room, concerned about difficulties she recently faced accessing information about a former fund, as well as the language and complexities involved that can often baffle consumers. “I want to know what my super is actually doing. It’s hard to know as a consumer.”

She says she regrets not getting a financial adviser earlier. “The minute you make money, you need to know what should you do with it. Yes, we are smart and educated, but then there are a lot of people out there who aren’t set up to think, ‘what should I do with this money to ensure it really works for me?’.”

Talking about money

It became clear during this session that having a frank conversation about money is not only unusual, but can also be deeply cathartic.

It also became clear that once given the opportunity and the space to feel comfortable discussing it, women have a lot to say about money. Particularly our concerns and anxieties when it comes to future-proofing our freedom.

And perhaps then, a key issue for women is that we’re not given such spaces and opportunities for such discussions.

Asked what she’d tell her 21-year-old self, Didi says she’d tell her to talk to her girlfriends about money. “We discuss boys and girls but we should also be discussing money. What are you planning on earning? I think I was taught not to talk with people about it because of this idea that, ‘you should never discuss your salary with anyone.”

More discussions about salary, as a start, could lead to a better understanding of what other people are earning and consequently what we’re worth.

Those discussions could in turn lead to more conversations about superannuation – perhaps to the point of making it something to feel excited about.

Turning things around 

Finally, I wanted to get back to Melissa who was mentioned at the beginning as losing a sickening amount of money after discovering her now ex-husband had gambled it away within the space of 12 months.

Towards the end of our session, Melissa mentioned she’d recently received a significant pay rise – thanks to some lessons learnt during a recent Human Super salary negotiation workshop. She said the key for her was to go into the negotiation armed with facts, particularly facts regarding what people in similar positions in similar industries earn.

But she also added that she was about to settle on a new house.

Finally, almost ten years after losing everything, she was purchasing a home in Australia.

This is a remarkable achievement and shows a significant turnaround from relinquishing one’s finances to really taking complete control. The control she took came from sheer desperation, but it shows how quickly things can change and why it’s worth making the effort to improve your financial future now – no matter what mistakes or adversity faced in the past.

Women’s Agenda ran this roundtable in partnership, and with the support of Human Super, a new superannuation fund, crafted for women, launching shortly. 

Pictured above is Human Super’s CEO Pascale Helyar-Moray, who helped me facilitate the discussion.  

Human’s Super’s next salary negotiation workshop is on February 21

* Not her real first name. 

 

 

 

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