Women and retirement savings

I recently read an interesting article in the Sydney Morning Herald, about women and superannuation – our state mandated retirement policy. The law states that employers must contribute 9% of their employee’s salary into a superannuation fund, which cannot be touched until retirement. (Simply speaking of course – there are loopholes in every part of that previous sentence, but I’m trying to keep it simple!). With July 2013 clicking over, Australian’s will now get 9.25%, increasing slowly to 12% in 2019.

It’s a great system – but it’s not working in reality. And it’s not working the most for women. Naturally, women take time out of the workforce to have children, and this impacts their retirement balance. Women also live longer, which means they need even more than a man would.  The article outlines the details of the shortcomings most women will face, based on their research.  There is the capacity for individuals to add to their superannuation, up to a point (it’s got some preferential taxation laws, so it was being used by the super rich to save bucket loads of cash). In my first year of working in my career, I overheard older people talking about their super balances, and how much they should co-contribute to have enough in retirement. Of my own volition, I took this eavesdropping to heart, and decided that I wouldn’t miss $50 per week, and I’d add that (pre tax) to my super account.

What I find incredibly interesting in this issue is the discussions I have with people my age: almost everyone is against or ambivalent that someone their age would be doing this! Their feelings are either

  • I need the money more for other things (lifestyle, saving for a house, paying off a mortgage)
  • You never know what might happen to the balance (as it’s in the stock-market)
  • Retirement is so far away – if I have a huge property/shares portfolio, I’ll be fine

Evidently, I don’t buy into any of these arguments.

Reading the article that I linked, heartens me.  It heartens me most when I look at the graphic. (You can be disheartened, so you can be heartened right? Spell check disagrees?!)

source: smh.com.au
source: smh.com.au

I don’t like to be brash, or the tall poppy (something Australian’s avoid). But that decision in 2010 has meant I am ahead of where a 45-49 year old women is!  I’ll admit it’s not all my doing, my employer has been contributing above 9% for as long as I’ve worked here (4.5 years), and has risen to 15% today!  When I asked a colleague who started when I did, therefore had the same salary, his balance was $19k less than mine. Both of us have our entire balance in the high growth option.

It’s nice to feel safe to take some time off to have children! And I can heed the advice, which is ‘a man is not a plan’ (but a man sure is nice…)

I’m glad to see other bloggers at my age and stage are talking about retirement savings… even if my real life friends aren’t!

How do you feel about retirement savings?  Is it too risky to let a fund manage a huge amount of your money on the stock market?  Do you think you can do a better job?  Would you co-contribute?