WHO?s The BIGGEST loser women or men? Read the findings.
Although women are most likely to live longer than men, it is disheartening to note that there are substantial gender inequalities with our ever aging population. According to the Westpac Women & Retirement Readiness Report, the average 60 year old Australian woman would have to work for an additional 25 years to have the same super as her male counterpart. This is despite more women joining the workplace in recent years and a rising trend of women outnumbering men in tertiary institutions. Also superannuation contributions , property investment for women and other tax effective strategies are being utilised more today than ever before.
The basis of the concern relates to the growing gender wealth gap across all age groups with the widest gap being among the younger population. A report released by Curtin University Economists indicated that gap in the average wealth gap between men and women across all age groups grew from $18,300 in 2002 to $47,000 in 2010.
The report further revealed that the widest wealth disparity was between younger men and women with the average man below 35 having assets worth $120,000 in 2010 compared to a paltry $63,500 of the average woman below 35. A wide wealth gap among the young population means women are more likely to have lower standards of living in their retirement.
Although both men and women are guilty of putting off decisions to do with their retirement at one point or another, women seem to do it more than men. In a recent survey more than 83% of women interviewed did not feel prepared for retirement (Source: Westpac Women & Retirement Readiness Report).
Indeed women take more career breaks than men to take care and nurture their families and women also receive lesser pay than men at the average workplace. These facts notwithstanding, many women may feel some level of regret for not setting aside enough money to fund their retirement lifestyles. You can only imagine not being able to afford basic commodities such as groceries in your later years.
Additionally the gender pay gap between men and woman exists worldwide which also impacts the amount of wealth women can accumulate. The OECD figures below demonstrate this :
So what can you do as a woman to avoid this future dilemma?
Despite all the discouraging reports, you can decide to take control of your retirement future. The first thing you need to do is to set clear retirement goals. Your goal will specify your desired retirement lifestyle which in turn will dictate your savings plan. The majority of women aged 50-65 regret not having a formal approach to retirement. Because it is a ?too little too late? situation, they can only advise their daughters to start saving as early as possible not to end up disappointed in retirement.
Once you have set your retirement goals, you need to draft a budget for your retirement lifestyle that supports regular expenditure such as medical bills and utilities. This budget will help you know how much money you would need during your retirement. The next thing you need to do is to clear all your non investment debts soonest possible (eg credit cards, personal loans, home loan). The idea is to have ample time for your income and assets to aggregate and be a sizeable chunk prior to retirement. You should aim to repay most of or all of your non tax deductible loans before hitting 55.
The good news is that more and more women are becoming aware of the importance of retirement planning.
According to a research conducted by Curtin University?s economists the superannuation balances of single women across all age groups grew faster than men?s between 2002 and 2010. Signs that women are taking a more proactive role in their retirement.
You could also explore the tax benefits of superannuation, property investing and other like investments. Property investment for women has been historically difficult as juggling a family tends reduce the time they have to secure an income for buying property. However many women have been noted as becoming wealthier from property investment in recent years and the trend could continue to rise. Avid property investor Mel Obrien suggests that “women need to take more interest in their financial well being and not just leave it up to their superannuation funds for a comfortable retirement. She says that taking the first step to actively manage your finances is the best thing you can ever do”.
A professional financial planner or advisor can help you utilise the benefits of smart investing and utilse available avenues of building your long-term wealth.
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