Super women: how to boost your retirement income
By Sharon Bradley
This article first appeared in the Sydney Morning Herald's Good Weekend
"C'MON, BE independent; get a bit Beyoncé about it!" laughs Faustina Agolley. The then 30-something TV host and DJ – "Fuzzy" to her friends – is at home having a chat with Laura Higgins from the Australian Securities and Investments Commission (ASIC) for the first in a series of financial capability videos called Women Talk About Money.
The goal of the campaign, which also includes heart-to-hearts with actress Kate Ritchie, writer Jane Caro and Girl Geek Academy's Sarah Moran, is to encourage women to start thinking about their financial futures. There's every reason not to delay: women typically retire with 47 per cent less super than men; more than 40 per cent (yes, that's right) of single older women in Australia are living in poverty; and nearly half of all older women – 44 per cent – are as financially reliant on their husbands as a Regency matron in a Jane Austen novel.
Retirement income inadequacy still a talking point for women
Why is it that, in 2019, when women constitute 47 per cent of the workforce, female retirement inadequacy is still such a talking point?
"The most significant issue, interrupted work, has been the same for decades," says Laura Menschick, a director of WLM Financial Services. "Typically, women are the ones taking time out to raise children or look after ageing parents."
Retirement income suffers if women earn under the threshold
When they go back to work, she says, it's often on a part-time basis. If they earn less than $450 a calendar month, their employer is under no obligation to pay the super guarantee (SG); it's estimated that 220,000 women are missing out on $125 million of super because of this threshold.
"Plus, women are carers," Menschick says. "If there's any spare money at the end of the month, they use it to buy ballet shoes or soccer boots. They're not looking forward 20, 30 years to their retirement."
Then there's the pay gap that simply can't be ignored. For the past 20 years, it's been between 14 and 19 per cent – the equivalent, ladies, of having worked the past 60-odd days without pay.
Women's retirement income affected by outdated super system
For Sandra Buckley, chief executive of advocacy group Women in Super, it's not rocket science. "The current superannuation system is outdated," she says. "It doesn't reflect the way Australians engage in work today and needs to be changed into a fairer system for women." As her organisation emphasises, only 2.5 per cent of women between 30 and 40 will reach retirement with an income at or above $43,601 a year, the amount the Association of Superannuation Funds of Australia deems necessary for a "comfortable" standard of living.
Women In Super lobbying for change to retirement system
Women In Super is lobbying for three legislative changes: for the SG to be raised from 9.5 per cent to 12 per cent; for employers to make super contributions during the 18-week paid parental leave period; and for the phasing out of the $450-a-month pay threshold for super eligibility, which penalises the part-time low wage-earner, a category into which so many women fall.
Working women need to think about their future retirement income
In the meantime, working women need to start thinking about the future they want and putting aside the money that will enable it. Engaging with their super, the best saving tool at their disposal, is the first step. Choose your fund carefully, advises Menschick, who directs clients to ASIC’s MoneySmart website, which provides comparisons between various funds’ performances and fees. "If you have multiple accounts, consolidate them," she urges. "It reduces fees and it’s much easier to keep track of your savings."
Also, find out if your fund offers insurance. "Consider life and disability insurance as well as income protection," she says, all of which become more important as we get older and accumulate dependants. Once you've set up your fund, monitor it, and, when you can, top it up. A 1 per cent boost now could become a 20 per cent windfall in the future.
Education should begin young
Education around super should start with a young person's first pay cheque, Menschick says. She shares the advice that she has given to her children and grandchildren: "Live on 80 per cent of your wage. Put 10 per cent away for a future investment – a first home deposit, say, or a new business. Don't ever touch that. Save the other 10 per cent for a treat – a holiday or a car, something that's probably going to devalue immediately. Oh, and when it comes to buying a car, choose the cheapest model your ego will allow!"
Empowering women to become financially fit
Helen Murdoch, general manager of corporate super at MLC, agrees that education is crucial. "We're hearing from women who haven't gone on the journey to being financially fit, and then, in their later years, they're forced to deal with quite complicated, high-stakes problems and they're not in a position of confidence to do it," she says.
"We want to support women of any age, but we especially want to get their attention early to empower them to not feel intimidated." Last March, on International Women's Day, Murdoch hosted a financial wellness webinar to which 500 women logged on to gain insights and tips from a round table of four financial experts, all of them working mums. More are planned.
In Women Talk About Money, Agolley tells Higgins: "Have clear goals. Know what you want. That's where the power is – in asking the questions. If not, you're just watching Netflix and scrolling through Facebook, right?"
Disclaimer: The information contained in this communication is general in nature and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for your personal circumstances prior to making any investment decision.