On Sunday night I had dinner with my brother and his fiancé, and the topic of superannuation and retirement came up. This is rare for a group of 20-somethings.
On their wedding they will spend somewhere in the vicinity of $50,000-$60,000, that is becoming a reasonable amount for many future newlyweds. My brother is in a technical role, while his fiancé works in property administration, he ends up out-earning her. When we discussed superannuation she quickly said that it wasn’t her priority at the moment, even though it should be.
Most of us can connect with that mentality. It doesn’t matter how often we are told that we should care about our retirement finances, but it seems to end up at the bottom of the pile too often.
Since the introduction of the formalised superannuation system gaps have been found, especially for women. There is limited consensus whether Gen Y recognises this, and what impact they think the gender pay gap will have on their retirement.
Earlier this year I undertook some research on this area and I can confidently say that there is limited knowledge on superannuation and its importance in Australia. I think it is young women, and their boundless potential, that we should be most concerned about.
There is even less knowledge around when it comes to women’s financial state when they are aged. The superannuation pay-out for Australian women is $37,000 compared to $110,000 for men.
The fusion of liberalisation and the baby boom following WW2 saw the rise of women in the workplace, with rising rates of education, employment, political participation along with leadership and management.
The women in their 50s and 60s are realising that they cannot rely on men to support them into the future. For some of them it will be too little too late. With meager superannuation amounts they will be left with few options should they end up alone.
I aimed to find out the lay of the land on retirement, particularly for young women.
40.14% of respondents felt unsure, ill-prepared or somewhat ill-prepared about retirement. Retirement is something that needs forward-planning, and that’s why we have the superannuation system that we do.
Perhaps my respondents are a bit too confident as only 55.1% noted that the addition of children will impact financial capacity, leaving 44.9% either feeling that children will make a neutral or minimal impact on their finances. In current terms, children can cost $500 a week, or in excess of $500,000 until they turn 21.
The people I interviewed, surveyed and spoke to had limited ideas on what they needed to support themselves as they age. To call this an uneducated guess, in most cases, is doing them a favour.
If women don’t have the same capacity as men to spend money then they’ll either be losing out on certain services or having to negotiate on which are more important for them.
It is financial literacy and recognising the role of men moving into caring roles that can help change this.
Financial literacy is a concept that should start earlier than it does. The concepts of savings and money management are both academic and practical skills that can be better used across subjects like maths or economics. It also makes these topics more accessible to people that consider themselves to be “bad” at maths.
Men need to step up to the plate for the sake of the economy and society. If men can take greater caring responsibilities it’ll allow women to improve their overall economic standing.
With the government increasing the retirement age, and changes to welfare arrangements individuals need to take greater interest in where they want to be later in life.
We cannot continue to expect women to be fine in retirement when they have one hand behind tied their back. Career breaks, the gender pay gap and lacking access to leadership is part of this hindrance.
We all have a role to play when it comes to retirement. Whether it is our own situation, our peers, partners or parents, we need to consider where we or our loved ones want to be 20 or 30 years into the future.