For many of us, our super is the second largest investment we will ever make after our home. The apathy that many have towards this nest egg is a widespread problem, exacerbated by the recent poor performance of many super balances.
New research from Roy Morgan has revealed that some are far worse off than others;�women’s super balances are on average 40 per cent lower than their male counterparts at retirement!
Currently, women have an average super balance of $92,000 at retirement, while the average male retiree has $154,000. The gap between genders starts to form in the 30-34 age range. Coupled with this, the decline in balances for women also starts earlier than for men. This suggests that women are retiring earlier than men and drawing down their funds at a younger age than men.
The consequences of this can be dire, and are the result of what is now being called the ‘baby gap’.
It is estimated that taking just two years out of the workforce to have children can result in a $50,000 deficit at retirement. To make this up, women need to make an additional 1% super contribution for every two years spent out of the workforce, for the rest of their working lives.
On top of this, due to increased longevity, a woman who retires at 65 (assuming they retire at the same age as men, which research suggests they don’t) needs to save $55,300 more than a man.�This is more than double the typical super balance many women are currently retiring with.
There are many that will be left with virtually non-existent super balances at retirement. With renewed focus on super and its potential taxation, something has to change or Australia will be left with an unbearable taxation burden in the future.
These figures bring into sharp relief why super is one of the most important topics in the industry. If you’re not speaking to your clients about super, then chances are someone else is.