Many female clients still facing uphill battle in retirement savings

With fewer clients feeling secure in their retirement savings, women in particular often face the biggest risks to their retirement security.

Australians in general are expressing low confidence in their retirement outcomes. Data released by AMP in their Retirement Confidence Pulse found that 50 per cent of Australians do not feel secure about their retirement.

“The rising cost of living and surging household expenses have seen the annual cost of a comfortable retirement climb by more than $13,000 in just five years,” AMP said at the time.

Breaking down this data further, AMP found that women in particular have heightened insecure feelings about retirement, with only two in five women feeling confident that they will be financially stable once they stop working, opposed to nearly three in five men.

“Almost all the women I work with start out with some level of doubt about whether their retirement lifestyle will be sustainable, or even if retirement is achievable at all,” founder and managing principal at White Rabbit Advisory Nicola Beswick told ifa.

“Many have spent years as stay-at-home mums, which means their superannuation balances are lower because of time out of the workforce.”

Both AMP and Beswick identify single women as being particularly vulnerable to retirement insecurity, with only one in five in this demographic expressing a sense of retirement security, according to the AMP data.

“Single women, who may be divorced or widowed, face higher risks because they don’t have the benefit of a partner’s income or superannuation,” Beswick explained, while also highlighting women on disability and compensation payouts as another vulnerable group.

“Even though that money provides short-term support, it can create anxiety about whether it will be enough to last through retirement.”

She added: “Sadly, this because relationships can break down when someone gets sick.”

Beswick diagnosed a number of reasons for this lack of confidence to ifa, including ongoing economic inequalities woman face in their working lives.

“Many women who are now in the stage to be planning for retirement may have been affected by the gender pay gap through their working life and may have taken breaks in their career for caring responsibilities,” she explained.

She also highlighted, that because women generally live longer than men, their balance needs to be able stretch further, a challenge considering many are likely to have worked in careers impacted by the pay gap.

“Financial literacy is also a barrier that affects many women, making them feel less confident in making the right decisions for their future,” she added.

Divorce later in life is also another contributing factor: “They may have to start over financially, often without the family home. Renting later in life, particularly after having previously owned a home, can create a real sense of instability and anxiety about the future.”

For advisers looking to reassure their female clients who might express anxiety about retirement, Beswick recommends linking them with other women.

“Women tend to prefer working with other women, especially in areas where there is a lot of uncertainty, and they want to be educated in a way that engages them rather than just being talked at.”

Ensuring this type of client is not feeling “talked at” requires advisers to often provide the ‘why’ behind certain decisions, building trust and giving them the confidence to follow through with the plans that are put in place.

Beswick concluded: “Advisers who provide that extra level of support and education can make a huge difference in helping women feel more secure about their finances and their future.