Why are women at a disadvantage to men when it comes to planning for retirement or early retirement? This needn’t be so, with some careful thought and planning women can get ahead of the game.
Women has less super
As superannuation payments are tied to paid work, women face smaller payouts when retirement age draws near because they are more likely to have spent less time working. Maternity leave, time off to raise a children, single-handedly keeping a family and a tendency to work shorter hours, part-time or casually – all mean less superannuation. In fact, a woman who has had three children is expected to have earned 44% less during her lifetime than a woman who is childless. This in turn means less contribution to superannuation.
Women earn less
In addition, women who are working full-time tend to earn less – in Australia it’s 11% less – than men in the same position, which also affects retirement plans. Relying on your partner’s superannuation is also unwise with divorces rates as high as they are.
Women live longer
Yet another confounding factor for women is their longer lifespan which requires retirement funds to last longer. Women need to plan and carefully manage their wealth to ensure they have enough to see them through the years of life after work. Women of the ‘baby boom’ generation who are now reaching retirement age and might have higher expectations for their retirement lifestyle are particularly at risk.
Retirement can mean poverty for women
Retirement should provide people with some of the best years of their life, but sadly, women often face a life of poverty once they reach retirement age, and choosing early retirement has also been an impossibility for many. According to the Association of Superannuation Funds of Australia, the average superannuation account balance for a man is two-thirds greater than the average account balance for a woman. But with the changing face of the Australian workforce, it’s also important for men to beware the pitfalls of insufficient planning when it comes to retirement. Ensuring you have enough wealth to carry you through your retirement depends on how much money is being contributed to your superannuation, when you started making payments, when you plan to retire and what standard of living you expect.
Make your own retirement plan
Although superannuation policies need to change in order to alleviate this inequality, making your own thorough retirement plans will ensure the golden years of your life are just that – golden. Looking at other investment options beyond superannuation can help you spread your wealth and ensure you look after yourself. One way to beat the superannuation gap is to invest in property as part of your retirement plan thereby diversifying your savings and securing income when you no longer want to work. Property can continue to increase in value and pay you rent long after you choose to stop working. But whatever your strategy, it’s important to discuss them with a trusted financial advisor. No matter your age or your lifestyle, when it comes to thinking about retirement plans and early retirement it’s never too soon to start forming a strategy and to begin investing your wealth for the benefit of your golden years – it’s something every woman (and man) should plan for.
About Author: Kathy Roberts is mother of 3, a nurse, a property investor and a coach. Kathy is passionate about helping women to build their own wealth to gain security and independence. She has bought back her own home twice after divorces. She knows hands on what obstacles face many women. Today she is financially secure after having built a property portfolio from her nursing wage. Read more about Kathy on her website http://www.coachingwomeninproperty.com.au