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  • Writer's pictureMatthew Carberry

5 steps women can take to improve their retirement readiness

Women’s superannuation is not so super. At retirement, Australian women on average have $157,050 whereas men have $270,710—a gap of $113,660,according to data released by the Association of Superannuation Funds of Australia in 2018. The gap between women and men extends to younger cohorts too. Women aged 30-34 have balances of $33,750, whereas men have $43,580.The gap is closing, albeit slowly.

Why women are lagging behind?

The reasons are manifold, but a few factors loom large. Women have lower lifetime earnings than men, due to wage inequality, a reluctance to negotiate for better pay and the reality that women are more likely to stop working or maintain a reduced schedule to devote time to caregiving for children, elderly parents, or both. Women in Australia earn an average of 14.6 per cent less than men, and in full-time roles that number rises to 22.4 per cent, according to the Financy Women’s Index. In addition, women must stretch those smaller average balances over a longer time frame in retirement as 65-year-old women outlive their male counterparts by two years, on average.

What to do about it?

  • Take control of your retirement savings : Consider transferring all your savings into one fund. This will help stop multiple fund fees from eating into retirement savings. And while you’re there, take sometime to understand exactly how much you’re paying in fees, where your funds are invested, what insurance you hold, and your fund’s long-term performance.

  • Maximise contributions before, during, and after work disruptions : You can salary sacrifice $25,000 a year (total including employer contributions) into your superannuation as pre-tax contributions, taking advantage of the tax benefits this brings. Plan for super contributions as part of your career break, this method ensures there are minimal changes to your superannuation balance but requires time and investment beforehand. When you are saving for a planned career break, ensure that superannuation contributions are included in the calculation process. Contribute as your employer would during the period.

  • Get off the sidelines : Research on women’s investing behaviors is all over the map: Studies have pointed to women investing more conservatively than men, trading less, being more patient, or being more goals-oriented. Other research indicates that once you control for income, women’s investing behavior is very similar to men’s.

  • Consider working longer: The financial (and possibly other) benefits of working longer are undeniable: Additional retirement-plan contributions, delayed portfolio withdrawals, a shorter drawdown period can all help bolster the viability of a retirement plan. The benefits of delaying retirement are especially great for women, in that interrupted work trajectories (for caregiving, see above) and longer life expectancies compound the stresses placed on retirement assets. For women hurtling toward retirement shortfalls, delaying retirement will be the single-most financially impactful decision they can make

  • Lay a plan for healthcare costs: As you reach retirement, you are far more likely to develop chronic conditions(half of Australian women have one or more) that requires specialist care. Australia has one of the best universal health programs in the world, but despite this it is not comprehensive when it comes to ongoing specialist care.

Verve Group can help you put these strategies in place to guarantee a comfortable retirement. Book a free initial consultation with one of our Financial planners to secure your future.

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