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2015 Westpac Retirement Readiness Report

05 May 2015

Women May Need to Work 15 Years Longer to Retire with the Same Amount of Superannuation as Men  

  • $145,000 gap between median superannuation account balance for women and men, aged 60 to 64, in Australia
  • 84% of Australian women surveyed do not feel adequately prepared for retirement
  • Almost nine in ten Australian women (89%) are worried about maintaining their standard of living during retirement

The average 60-year-old Australian woman may need to work an extra 15 years in order to retire with the same superannuation account balance as her male counterpart[1], according to the 2015 Westpac Women & Retirement Readiness Report[2], released today.

The report has found a $145,000 gap between the median superannuation account balance for women and men ($268,000 and $413,000 respectively), meaning women on an average female wage ($53,700 p.a.) may need to work until they are 74 to start their retirement on a level financial playing field.  

“Being prepared for retirement could not be more important, yet it is something that too many of us ignore until it’s too late. Many women face unique issues when it comes to saving for retirement. Women are often the primary carers for children as well as aging parents, receive less pay than men and frequently work in a part-time capacity. As a result, it is important for women to start preparing for life beyond work as soon as they enter the workforce. Retirement planning doesn’t need to be daunting and women can take small steps, starting from when they enter the workforce to ensure they are on track for a comfortable retirement,” said Westpac’s Director of Women’s Markets, Larke Riemer.

Alarmingly, 84% of Australian women surveyed do not feel adequately prepared for retirement, with a further 23% saying that they were not prepared at all. Although many plan to travel (64.7%), relax (71.6%) and spend more time with family (56%) in their retirement, almost nine in ten (89%) are worried about having sufficient funds to maintain their standard of living.

Further, the report found that two in five (39.1%) women surveyed don’t seek advice from anyone about financing their retirement. For those who do seek advice, a partner or family member is the most common source to speak with, with 34% of respondents indicating that their advice is sourced via these personal relationships. This trend is particularly common for young women with 45% of those aged between 18 – 29 looking to family members and partners for financial guidance.  

Ms Riemer said, “What this research is showing us is that women are not seeking sufficient expert advice early on in their working life about their retirement which can help them set clear goals.

“Women could consider tactics such as paying off debt before retirement and trying to build wealth throughout their working lives. Making additional voluntary superannuation contributions consistently early in their careers, small or large, and taking advantage of possible tax incentives could really make a difference to the end result. Also, have a plan and stay engaged by setting concrete goals – this should mitigate any surprises down the track.

“People are living longer and naturally they want to be able to enjoy their retirement. It has been recommended that women and men should aim to build a retirement income that is 65% of their working income. Dedicating some time and consideration to preparing for retirement now can put you in a far more comfortable position for the future,” concluded Ms Riemer.

Westpac Retirement Tips for Australian Women

 1.     Identify the best ways to build wealth

Build a portfolio of good assets that support your financial goals. As you get closer to retirement, you can consider increasing your contributions to your superannuation.

 2.     Be clear on your retirement goals

It’s important to understand what you want out of retirement and how to plan accordingly. Different desired outcomes require different amounts of money however you should aim to retire your debt before you retire.

 3.     Explore tax benefits

There are considerable tax benefits to contributing more to your superannuation, so this is something that should be explored and considered in your planning.

THE WESTPAC WOMEN & RETIREMENT READINESS REPORT

About the Pureprofile survey

This survey was commissioned by Westpac and powered by Pureprofile. It was generated by an online polling of 1000 females aged between 18-65 years who work full time and are currently residing in Australia, sourced from the Pureprofile Panel. A copy of the executive summary of the report is available upon request.

 

Key Findings:

  • 84% of Australian Women surveyed do not feel adequately prepared for retirement
  • Almost 9 in 10 (89%) are worried about maintaining their standard of living during retirement
  • 23.3% of respondents are not prepared at all prepared for retirement
  • In their retirement respondents plan to:

Travel (64.7%)
Relax (71.6%)
Spend more time with family (56%)

  • Two in five (39.1%) women over 18 don’t seek advice from anybody about their finances for their retirement
  • 34% of respondents said advice is sourced from personal relationships (partner, family member)
  • 45% of those aged between 18 – 29 look to family members and partners for financial advice

 

BT Superannuation Calculation Key Findings:

  • $145,000 gap between median superannuation account balance for women and men, aged 60 to 64, in Australia
  • The average 60-year-old Australian woman would need to work an extra 15 years in order to retire with the same superannuation account balance as her male counterpart
  • A $145,000 gap exists between the median superannuation account balance for women and men
  • Median superannuation account balance for women is $268,000
  • Median superannuation account balance for women is $413,000


(i)            Calculation (number of extra working years required for females to retire with the same superannuation account balance as males):

 Base: Australian adults (18 years or older) unless otherwise specified:

  • Male versus female average superannuation balance aged between 60-64 (includes retirees):
    • Male median: $413,000
    • Female median: $268,000
    • Note difference: $145,000
  • Average salary for women in Australia:
    • Note: Base is working women. Based on personal income from all sources, not just salary income.
      • Mean: $53,700

Assumptions:

1. The calculation is based on the current average salary multiplied by the current legislated Superannuation Guarantee (SG) rate – no allowance is made for earnings on the accumulated superannuation balance or contributions. In addition, no allowance is made for earnings on the equivalent median male balance or any pension drawdowns which would alter the gender gap

 

2. No allowance is made for salary growth or for inflation

 

3. Assumes superannuation contributions at the legislated rate only for which there is a current proposal to defer increases in SG for 2 years

 

4. The proxy for income used includes all sources of income not just employment income

 

5. Assumes Contributions tax of 15%

 

 

 

Net of CT

Contributions tax (CT)

15%

85%

 

5. Contribution rates:

 

Contribution rate

 

1 July 2013 – 30 June 2014

9.25%

1 July 2014 – 30 June 2015

9.50%

1 July 2015 – 30 June 2016

10%

1 July 2016 – 30 June 2017

10.50%

1 July 2017 – 30 June 2018

11%

1 July 2018 – 30 June 2019

11.50%

1 July 2019 – 30 June 2020 and onwards

12%

 

Note: Contribution rates are based on current legislation, however Westpac is aware this is being reviewed by the senate to put these increases on hold.

 

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1 comments

  • Hannah Fairlamb

    Hannah Fairlamb 4 years ago

    Just wondering where I can get a copy of this report?