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Welcome Aboard, GFS!

Drumroll please... We’re thrilled to announce that Goodwin Financial Services (GFS) is joining Altus Financial, giving our clients access to even more market-leading wealth management expertise. GFS has forged a longstanding reputation as one of Sydney’s premi.....

Wealth, Super - 9 min read

No two journeys toward retirement are the same. Some people start their careers right away, some spend many years in higher education, and some work sporadically throughout their lives. Some people marry, and some have children. Some people strive hard to retire early, and some love working so much that they’d rather not retire at all.

That’s why it’s so important to have an individualised retirement plan. As you work through your own personal plan, consider how your gender affects your retirement roadmap. In many ways, men and women travel the same road to retirement and face the same challenges. But there will likely be some differences, so it’s helpful to pay attention to the factors you’ll need to consider.

Let’s start at the beginning of the retirement roadmap.

 

Work

According to the 2014-2015 Multipurpose Household Survey from the Australian Bureau of Statistics, roughly 9.1 million people aged 45 years and old had worked at some point in their lives. About half (52%) were currently in the labour force, and another 40% had retired. Another 8% were currently unemployed but hadn’t yet retired.

More men than women were currently in the workforce (58% of men compared to 46% of women). This is not unusual. Many women find themselves in the role of caretaker in their families, raising children and caring for their aging parents. 

With Australia’s superannuation system, those who are employed regularly contribute to their super funds. Those with steady work continually build their retirement fund, even if they’re not salary sacrificing additional funds each month.

Women who don’t work in the labour force need to think about how they will be supported during retirement. Single-income households will need to calculate how much they’ll need to save to support both partners during retirement, and in many cases, this will require salary sacrificing, above and beyond the government mandated amount.

 

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Length of Employment

Another variable in retirement roadmaps is the length of employment. Some people start their careers early and have more years in which to earn and save money. Others spend more years in school. Some people retire early, and others continue working into their seventies or even longer.

As you create your personalised retirement plan, consider your own length of employment. Do you plan on working as long as possible? Would you like to retire early? How is your health? By changing this variable in your equation, you’ll know if you need to speed up your saving or if you can continue at the same rate.

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Most men work steadily throughout their careers, making this equation fairly straightforward. Women, though, may find themselves in and out of the labour force, depending on what’s going on in their families. For example, many women stay home with their children for several years while the children are young but then return to the labour force once the children are independent. It can be difficult for women to predict length of employment in such situations. Speak with your Wealth Management Adviser about how to calculate super contributions in these cases. You’ll probably need to recalibrate your roadmap through life’s changes.

 

Income Streams

The Multipurpose Household Survey cited above also reported on sources of income during retirement. The most commonly reported source of retirement income for men was “government pension/allowance” (51%), while only 43% of women reported that a government pension or allowance was their primary source of income. Instead, 42% of women reported “partner’s income” as their main source of funds, compared to just 8% of men. 

Some Australians reported dividends or interest as a source of income, and about 13% reported superannuation/annuity/allocated pension as their main source of income. Remember that superannuation was not fully instituted in Australia until 1992, so many of today’s retirees didn’t have a chance to save much in their super funds before they retired. Future retirees will probably respond to that question much differently.

Since your retirement roadmap should match up with your personal journey through life, you’ll need to consider your own retirement income streams. Do you have investments in businesses or real estate that will provide you with income after you retire? Are you expecting to receive any royalties or loan repayments? These income streams should be included in your calculations as you plan for your retirement and decide how much to contribute to your super fund.

 

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Estate Planning

Along your roadmap to retirement, you should remember to include estate planning. Estate planning not only helps you to look after your property and dependents after you’re gone, but it also helps you to make sure your retirement roadmap is complete.

Because estate planning deals with end-of-life issues, many people mistakenly assume that it’s a task that you need to take care of near the end of your journey through life. The trouble is that none of us knows when the end will come. It’s especially important for parents of young children to take care of their estate planning. For many people, that means writing a will in their 20s, 30s, or 40s.

Are there any major differences between estate planning for men and estate planning for women? Estate planning is equally important for both sexes, but there are some different issues to consider. For instance, women in Australia live about four years longer than men on average. Many Australian women will outlive their spouses, so it’s imperative that the women have wills that can appropriately distribute of the couple’s property. Also, because of a woman’s longer life span, she should plan on maintaining retirement income for more years and expect that she’ll probably have more medical needs.

 

Phasing Into Retirement

It’s becoming more and more common for Australians to phase into retirement, working part-time before they stop working completely. This can be a great way to transition to retirement in several ways. First of all, you can continue to earn income, and this can be especially helpful if you have some catching up to do with your retirement savings. Second, many people find that phasing out of retirement slowly helps them with the transition. They can start to enjoy their free time while still maintaining their professional contacts and skills. 

The Multipurpose Household Survey showed that 40% of Australians intended to scale back to part-time work before retiring completely. Of this group, 65% planned on staying with their current employers, and 21% thought they would change employers for their part-time work. 

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You could use your phasing out period to try your hand at a different line of work or to take up contract jobs you haven’t had time for in the past. Some people want to work from home to avoid long commutes or to spend time with loved ones. 

If you have reached the preservation age (at least 55 years of age, depending on your birth date), you may be able to use a TRIP (transition-to-retirement pension), which allows you to withdraw money from your super fund without fully retiring.

 

Retirement Age

Only 22% of Australians intend to retire between the ages of 60 and 64. Most choose to retire between 65 and 69 years of age, and 23% think they’ll wait until at least age 70. If you need to save more in order to comfortably retire, you may want to delay retirement. 

The preservation age for superannuation varies between 56 and 60, depending on your date of birth. Since most people don’t plan on retiring until at least age 60 anyway, preservation age doesn’t affect too many people.

According to the Multipurpose Household Survey, Australian women are retiring at age 64.5, and men are retiring at age 65.7. Your own retirement age will probably depend on a variety of factors, including your health, your savings, your family, and your interest in continuing to work.

 

Where Will Your Retirement Roadmap Take You?

Understanding how men’s and women’s retirement roadmaps differ can help you with your own personal planning, but nothing will help you to achieve your goals like creating your own personal retirement roadmap. A unique retirement plan that takes your current financial situation and helps you to set reasonable goals that will help you to arrive at retirement with enough money saved for your chosen lifestyle is exactly what you need, whether you are a man or a woman.

To meet with an adviser who can help you to create a retirement roadmap of your own, contact us at Altus Financial. Our experts know retirement planning inside out and can help you to provide for your own future and take care of your family.

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