Are women being short-changed on superannuation?

Women start from behind so they need to think about their retirement When the fab four from Sex and the City reunited for their film, they were still talking stilettos, not super. Pity. If they're anything like many Australian women, designer labels and fine dining could be a distant memory when they hit retirement.

It's no secret that women often fare worse financially in retirement than men. The double whammy of lower lifetime average earnings coupled with time out of the workforce to raise a family can make it challenging for women to build a man-sized nest egg.

As an added twist, women often live longer. Figures from the Australian Government Actuary show a woman aged 55 can expect to live to around 85 — about five years longer than for a man of the same age. Moreover, that same 55-year-old woman has a 10 percent chance of living to the age of 103.

Longer life is a plus — but it also calls for a greater retirement pool. And that's where many women come a cropper.

Figures from the Association of Super Funds (ASFA) show the average super balances achieved in 2004 were $56,400 for men and $23,900 for women. ASFA estimates the average retirement payouts in 2006 are likely to have been $130,000 for men and a mere $45,000 for women. At these levels, market images of silver-haired couples enjoying the good life can appear a little far-fetched.

Indeed the expectation of sharing retirement funding with a spouse could be optimistic. While Carrie and the gang from New York may be in constant pursuit of Mr Right, it's estimated that up to 23 percent of Aussie women may never marry. That makes building an independent nest egg a key priority. Joanne Morgan, Investment Sales Manager with Citibank, says, "Salary sacrifice remains one of the best ways for single women to build their super." Women earning below $58,000 annually can give their super an extra boost by making an after-tax contribution and tapping into the government's co-contributions scheme. However, Morgan points out that building super isn't just about additional contributions. She explains, "It is important for women to review their super fund's investment strategy. Investing in a balanced fund rather than a growth fund could mean missing out on higher long-term returns.

"Super isn't normally an investment we can access during our working lives. So women can afford to adopt a more aggressive approach even if their overall risk profile indicates a conservative investment style".

A degree of flexibility about when we hang up our work boots can also help our super last the distance — and it's a trend that is already underway. Figures from the latest Citibank Retirement Index show 20 percent of women 55 to 59 intend to keep working until age 70. A further 26 percent have plans to work in retirement. If art imitates life, that could see Carrie Bradshaw writing her spicy column as a sexagenarian.

For the complete story see Money Magazine's September 2007 issue. Subscribe now.