Women could be $192k better off at retirement with advice

A 50-year-old woman who seeks advice stands to be almost $200,000 better off in retirement, according to new Findex modelling, demonstrating financial advice can add more value than it costs and earlier engagement can have a massive impact on retirement outcomes. 

Presently, research by the Centre for Future Work suggests women earning the median wage will accumulate approximately $393,676 in super, around $150,000 below what is considered a “comfortable retirement”.

Similarly, according to the Association of Superannuation Funds of Australia (ASFA), men aged 60 to 64 have an average super balance of $357,777, while women in the same age bracket have $287,777. Both fall below the ASFA Retirement Standard of $595,000 for an individual and $690,000 for a couple to achieve a comfortable retirement.

So, while both men and women may be significantly behind in their retirement savings, women appear to be at a higher risk of financial insecurity when they reach retirement age, Findex noted. 

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As outlined in its latest research report, which surveyed over 1,000 Australians, the firm believes financial advice has an “instrumental role to play” in empowering Australian Gen X women to save the funds they need for a comfortable retirement.

Findex’s report highlights that as Australians approach retirement, they become less confident they will have the financial resources to retire comfortably. Only 5 per cent of Baby Boomers, 17 per cent of Gen X, and 22 per cent of Millennials are very confident they will have the resources to enjoy a comfortable retirement. 

Breaking this down further, less than half (44 per cent) of women believe they understand the financial resources they need in retirement compared to 61 per cent of men. 

While 37 per cent of men said they had sought advice, the figure was lower for women at 24 per cent.

“Our research report, The Cost of Doing Nothing When Preparing for Retirement, shows that many women have misconceptions about financial advice, which can prevent them from seeking advice that could make all the difference to their financial outcomes in retirement,” said Matthew Swieconek, head of investment relations at Findex.

“These misconceptions predominately centre around beliefs that the cost of financial advice is too expensive and that financial advice does not provide enough value, but our modelling shows that even when they’re less than 10 years away from retirement, many women can still benefit from financial advice but that the gains increase the earlier you start.”

Using financial modelling, the report demonstrates that a woman earning $100,000 per annum and accessing wealth management advice in her mid-30s could grow her net financial assets to an estimated $664,000 more than if she doesn’t access financial advice. 

In comparison, if she seeks advice at the age of 50, she stands to be $192,000 better off in retirement than if she hadn’t sought any financial advice.

Swieconek attributes this disparity between retirement outcomes to three major factors: time value of money and compound interest, maximising superannuation contributions and investment returns, and tailored financial strategies based on individual goals and circumstances.

He added: “Inadequate retirement savings reduces your ability to afford the retirement lifestyle you desire and can force you to go back to work and rely on government support. Seeking professional financial assistance is a proactive step toward financial empowerment.”

Without advice and a clear strategy, many Australian women could be at risk at retirement, missing out on things like wealth accumulation strategies and tax and investment optimisation.

“While it’s true that the higher your super balance, the more Gen X women will have to support the lifestyle they desire during retirement, it’s worth noting that it’s not the only vehicle they should rely on to meet their retirement goals – and exploring other options may be obtained through the help of financial advice,” Swieconek said.