Superannuation is likely to be the major source of income for most people in retirement. But with their average superannuation savings drastically lower than men’s, women have to work hard to ensure they can retire comfortably.
Why are women falling behind?
According to the ASFA Research and Resource Centre, women are well behind men when it comes to retirement savings, having identified a 45.7% gender pay gap in superannuation balances nationally in 2014 resulting in a difference of $37,749.
According to Lara Bourguignon, General Manager of Client Management at NAB, there is danger one in four Australian women will retire with little or no superannuation. In a recent MLC Wealth Sentiment Survey, women’s lagging superannuation balances was attributed largely to time taken off paid work to care for children. Other contributing factors, Bourguignon says, include time taken off to care for aging parents and the gender gap in wages.
Why are we ignoring super?
It can be tempting to ignore superannuation, or take a set-and-forget approach – especially for young people. Some find superannuation simply too confusing. For others, Bourguignon says, superannuation seems like it isn’t real money because it can’t be immediately accessed.
“However, it is real money and it is important to think about it like any other savings account,” she says.
“Setting and forgetting might mean you cannot live the lifestyle you’ve imagined in retirement. That is why it is important to engage in superannuation early in your career and keep a short annual review in your plans.”
Young people might also think they will be happy to rely on the pension in retirement. But someone’s expectations for retirement are likely to evolve over the course of their career. It’s not only necessary to establish a good superannuation plan early on, but also to revisit that plan over time.
“It is important that your superannuation and other assets are constantly reviewed to ensure alignment,” Bourguignon says.
What else can be done?
Superannuation can seem like an abstract concept for those who won’t be able to access their funds for 30 or 40 years. But awareness, Bourguignon says, is the first step for young women who want to control their retirement savings.
“Think about the retirement lifestyle you want, how much you might need to retire on [an online super calculator can help you come up with a rough estimate] and check out what your super balance is, how it is invested and what sort of fees you are paying.”
Those who haven’t been keeping an eye on their superannuation might be surprised at their balance or the fees they have been charged. However, Bourguignon explains that even small changes can help turn a person’s superannuation around.
“Changing simple things today like finding lost super, consolidating your super and sacrificing a couple of extra dollars each week of your salary can make a big difference.”
Even if a person is on a low income, they can still make valuable contributions to their retirement savings.
“Low income earners should consider making the most of the government’s co-contribution scheme. If you earn under $48,517 and make a personal after-tax superannuation contribution, the government might contribute up to $500 per year to your super.”
Getting educated
While superannuation might seem too abstract, too much work or just too confusing, even novice investors can begin educating themselves about their retirement savings, and superannuation providers can be a useful starting point.
“Generally you will have access to free online education, workplace education or financial advisers that you can call or see to learn more,” says Bourguignon. A financial adviser can help savers find out how to maximise their superannuation, protect their funds and complement their other assets.
Taking an active, interested approach to superannuation can help women make the most of their retirement savings.
“Your superannuation is real money and it’s yours,” says Bourguignon, “so look at it like any other savings account.”
For more information on NAB’s Start Counting program visit: www.startcounting.com.au.
Written by: Jessie Richardson