Women, retirement and poverty

Reading some of the statistics about women and particularly single women in retirement, can be pretty depressing. There are numerous stories about older, generally single women living in poverty.

Many of these have worked for most of their lives but for a variety of reasons have found themselves in financial trouble at a time when we would all like to have some financial security. Women who don’t own their own homes are particularly vulnerable.

There are lots of reasons why some women end up in this horrible situation and it certainly isn’t always through their own fault. Our current economic system is loaded against women and here are some of the factors that have added to the problem:

• Less than equal pay. In spite of years of agitation, women generally get paid less than men. In 2014 the difference in average salaries was 18%. This means there’s less opportunity to save for retirement.
• Time out of the workforce. Women have to take time out of the workforce to raise children. As a result they are losing out on income they could have made as well as superannuation savings. This interruption to a career often slows their promotion to better paying positions which also means less money going into their superannuation savings.

The organisation,” Women in Super” estimate that on average retiring women have $90,000 less in their super than men.

• Single income families. If a woman is single, or a single mother, it means it’s a lot more difficult to save money or fund a mortgage. The chances of compiling a healthy retirement fund are very remote.

The net result of all these factors is that many women enter retirement with very modest savings / superannuation and single women are generally at the lower end of the “modest” scale.

So what can be done?

There’s no single, easy answer. Clearly equal pay for equal work would help. So would other changes to the big picture issues involving child care, superannuation and paid parental leave.

However there are a few things that individuals can do to improve their own long term financial position:

Save, save, save. Get into the habit of saving or investing a little of your salary every pay day.

Take an active interest in your superannuation account. Superannuation offers most people the best chance of achieving financial security in retirement. Don’t just make the minimum payments and ignore what’s happening to your super. Salary sacrifice whenever possible and put as much as you can afford into your super. Most super funds offer investment options designed to yield higher or lower returns, depending on the level of risk involved. Talk to your super fund’s financial planners regularly and make sure that your money is generating as much as it safely can.

If at all possible buy your home, or part of your home. If you don’t have a partner and can’t fund a mortgage by yourself, think about sharing the purchase with a friend, relative or acquaintance. Shared housing is becoming more popular and is a good way to reduce many of your living costs.

If you’re single, insurance isn’t an optional extra.   If you don’t have a partner’s salary to fall back on in times of unemployment or serious illness, it’s important to have some Income Protection Insurance and Trauma Insurance. If you don’t have any money coming in in times when you’re not working, Centrelink is unlikely to be enough and you can easily get into serious debt. Talk to a good insurance broker.

Unfortunately, many of these suggestions require sacrifices and I wish I could offer easier options. However, the worst idea is to ignore your financial future and just hope for the best. The “best” might not be much good when you’re 65 and poor.

Tell us, have you living beneath the bread line in retirement? What advice would you give to those approaching retirement age?