In its new report, The Cost of Doing Nothing When Preparing for Retirement, Findex found that a woman earning $100,000 per year in her mid-30s could increase the value of her net financial assets to $664,000 more than without accessing financial advice.
“Financial advice has an instrumental role to play in empowering Australian Gen X women to save the funds needed for a comfortable retirement,” Findex said.
“By exploring the gender superannuation gap, the consequences of insufficient superannuation, and the benefits of seeking financial advice, we aim to equip women with the knowledge they need to navigate their financial journey confidently.”
According to the report, 61 per cent of men believe they understand the financial resources they need in retirement, compared with 44 per cent of women. In addition, 27 per cent of women and 15 per cent of men rate their understanding as poor.
Despite this, only 24 per cent of women and 37 per cent of men have sought advice, yet more than 80 per cent of Australians believe they could benefit from financial advice in retirement.
According to Findex, the most common reasons for not accessing financial advice are the perceived cost, the belief they don’t earn enough, and procrastination.
“Our report findings shows that people who seek professional financial advice are three times more likely to say they understand what they need to live comfortably in retirement, compared to those who don’t,” Findex said.
Using the previous example of a woman aged 35, earning $100,000 a year and accessing wealth management advice in her mid-30s, the report’s modelling found that the $664,000 benefit of advice drops to her being $192,000 better off in retirement if she accessed advice at 50 instead. Essentially, the 15-year head start was worth $472,000.
The report said that the main drivers for this gap is that starting early gives your assets enough time to grow and compound; maximising superannuation contributions and investment returns; and tailored financial strategies based on individual goals and circumstances.
“Engaging early with financial advice empowers you to make the most of your financial resources,” Findex added.
Inadequate retirement savings, the report said, reduces an individual’s ability to afford the retirement lifestyle they want and can either force a return to work or a reliance on government support.
“Seeking professional financial assistance is a proactive step toward financial empowerment. A trusted financial adviser has specialised financial knowledge and expertise you can access to maximise your current and future financial potential,” Findex said.
“They can assess your individual goals, income, expenses, and risk tolerance to create a diversified portfolio that aligns with your current circumstances and retirement goals.
“But, according to our report, they can minimise the gender superannuation gap through financial advice. Financial advice can teach wealth accumulation strategies, retirement planning and goal setting, tax and investment optimisation, and risk management.
“The knowledge and skills they learn can help them plan for the lifestyle they want in retirement. Without financial advice and a clear financial strategy, many Australian women may be at significant risk in their retirement.”
