Mar 29, 2020  | Tags: retirement planning, retirement

Our Insights

We know that retirement can be a daunting process for anyone, but it turns out a lot of women across the globe are less prepared for retirement than men. 

It’s particularly a concern in Australia, as studies show that Australian women rank low on a scale of retirement preparedness compared to other countries. 

According to data released by the Association of Superannuation Funds of Australia, Australian women have on average $157,050 at retirement, while men have $270,710. That’s a whopping gap of $113,660. 

The good news is improvements have been made over the years towards closing this gap, and women can feel more optimistic about their retirement. 

However, you should understand why this is the case and what you can do to maximise your savings by the time you reach retirement.

Why

Lower lifetime earnings

Despite efforts to reduce the gender pay gap, women typically still have lower lifetime earnings compared to men. In Australia, a male's full-time average weekly earnings are $1,751.40, while a female in the same position will earn $1,508.50. A lot of working women also show a reluctance to negotiate a better pay. The long-term impact of this is clear.

Time away from the workforce

One of the biggest factors affecting women is the high likelihood of a disrupted work schedule, often to make way for family obligations and caregiving. While men will generally maintain their full-time job over an extended period of their lifetime, women are more inclined to reduce their work hours to a part-time basis, or simply have time away from work altogether. There is also a lack of compensation for these caregiving responsibilities, meaning there are no replacement earnings coming in during these periods.

Longer life expectancies

On average, women live longer than men. As of 2018, after reaching age 65 (the retirement age), women are expected to live another 22.6 years on average (around 87 years old) and men 19.9 years (84 years).

While a longer life expectancy is always something to be happy about, it also means that women are having to stretch out their smaller retirement savings over a longer period of time.

How to get prepared

The obvious solution is to work longer, or at least as long as you can. However, we understand this is not possible or even the best option for everyone, so here's some other tips. 

Create a retirement financial plan

Developing a retirement plan holds great value and will ensure you don’t feel overwhelmed. It’s important to not only develop a written plan, but also to create contigencies that consider risks and events that may impact you. We've seen the importance of this recently through the COVID-19 crisis. 

Maximise cash-flow 

Find the right employment option that suits your needs. This is especially important if you are wanting to start a family and you anticipate your work could be affected by caregiving. Look out for employers who provide family-friendly policies like paid maternity leave. If possible, also look out for workplaces with flexible work hours or the ability to work from home. 

Start saving early 

Start saving as early as you can! It’s crucial that you build a budget and saving routine - including when, how frequently and how much you will save - and stick to it. We understand that situations change which will alter your saving patterns, but if you establish a comfortable saving routine you will benefit in the long run. 

Plan for healthcare costs

Healthcare costs can leave a huge dent in your retirement savings. Make sure you maintain a healthy lifestyle and plan for your healthcare costs from right now. This could be as simple as allocating a percentage of your savings every month to specifically go towards your future healthcare funds and insurances. 

Embrace lifelong learning

You should always strive to further your knowledge on investment, wealth and retirement strategies. Planning your retirement is a learning process and you should be open to opportunities, new research and expert advice.

Get Advice

it is never too early to take control of your retirement. The best way to ensure sustainable success and achieve wealth goals is to work with the experts. Get advice from leading advisers who can help you set a sustainable investment strategy and guide you along the way.

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Ben Calder at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own  circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.