A man is not a financial plan. But for a troubling number of women, finding themselves without a man in their later years could be poor planning indeed. No, I'm not being sexist. The unfortunate reality is that older women are some of the most financially disadvantaged people in the country and uncertainty about the future of superannuation risks condemning future generations of women to a similarly grim retirement.
Research by Rice Warner Actuaries for the industry fund AustralianSuper has found that only a small minority of households have what it regards as a ''comfortable'' standard of living in retirement. (More about what exactly it regards as comfortable in a moment.)
Of present retiree households, only 15 per cent of couples have a comfortable or better lifestyle. A modest lifestyle is enjoyed by 44 per cent of retiree couples and 40 per cent have a living standard that is ''below modest''.
But lose that couple status and the situation is even worse. Rice Warner found a similar proportion of single males experienced a comfortable retirement (14 per cent) but a much higher 60 per cent of single males were living a below modest lifestyle and just 26 per cent lived on a modest income. The odds of a comfortable retirement, however, dropped dramatically for older single women. Just 5 per cent were found to enjoy a comfortable retirement versus 70 per cent scraping by on a below modest existence.
The research is based on the Westpac Association of Superannuation Funds of Australia Retirement Standard, which attempts to quantify the income needed for a modest and comfortable retirement. Its most recent estimates (for the March quarter) put the cost of a modest retirement at $20,981 for single women and $30,399 for couples.
A modest retirement is defined as a standard of living better than the age pension allows (the age pension is at present about $17,000 for single women and $25,250 for couples) but still only able to afford fairly basic activities.
A comfortable retirement is defined as one which allows an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to be able to afford things such as household goods, private health insurance, a reasonable car, good clothes, electronic equipment, domestic travel and the occasional overseas holiday. In March, such a lifestyle was estimated to cost $39,159 for a single woman and $53,565 for a couple.
The standards were recently updated to reflect changes in spending patterns such as the growing use of computers and the internet among retirees and increased take-up of private health insurance.
When we think about retirement, most of us have the comfortable standard in mind. The baby boomers, in particular, don't fancy the austere retirement of past generations, where a weekly bingo outing or organised bus trip were regarded as highlights.
Retirement is increasingly seen as our chance to catch up on all the things we didn't have time to do while working: hobbies, sport, travel, outings with friends, and even further study.
But superannuation won't come close to funding this lifestyle at present levels of saving. While a well-funded minority will have the wherewithal to live out their retirement dreams, for most retirement is looming as a big disappointment.
Research for the Investment and Financial Services Association (now the Financial Services Council) earlier this year put the savings gap at about $73,000 a person. But this is just an average and for many the gap between their expectations and what they will be able to afford is even larger.
The problem for women is that our super accounts are a lot lower. For males aged 60 to 64, recent figures put the average super balance at just $135,000. For females, it was less than half that - $62,000. At these levels super is more likely to be used to pay off debt and buy items such as a new car or whitegoods for retirement than to generate a continuing income.
Many women, unless changes are made, will be relying on the age pension - particularly if we reach retirement without a partner to help fund the expenses.
Recent developments such as allowing super splitting and including super in property settlements have been a step forward, but have not overcome the fact that super is a work-related benefit which assumes a long and unbroken working life. Women, who are more likely to earn less, take time out of the workforce, and do casual or part-time work, are stuck behind the eight-ball.
With Labor's plans for super still uncertain, the super industry is keen to reignite debate on increasing super savings. The ASFA chief executive, Pauline Vamos, says lifting compulsory super contributions from 9 to 12 per cent is essential if we want to see a large increase in the proportion of retiree households achieving a comfortable standard of living in retirement.
She says ASFA's research indicates a couple, each earning $50,000 and receiving 12 per cent super contributions, would be able to achieve that comfortable lifestyle, while Treasury calculated an increase in compulsory super would generate an extra $108,000 in retirement savings for a 30-year old on average wages.
Super adequacy is not a female issue. There are plenty of people of both sexes likely to be disappointed in retirement if measures are not taken to boost retirement savings. But on the experience so far, it would appear women have higher odds of being caught short.
