Margaret May (McPherson, Liberal Party) Share this | Link to this | Hansard source

Today I want to put on record some interesting facts about women in retirement. Women live longer than men but have far less superannuation savings so see us through our retirement years. Over the past decades there have been remarkable improvements in life expectancy, with Australians living longer than ever. At the beginning of this century, a newborn baby could expect to live more than 20 years longer than a baby born at the beginning of the 20th century. We now have males living to around 77 years of age and females to around 84 years of age.

With this increase in life expectancy come new challenges. One major challenge is the issue of ill health as a result of ageing. Another challenge is the need for retirement savings to sustain us in our retirement. As women live longer than men there is a need for them to have more retirement savings. Nevertheless, women continue to retire from the paid workforce with insufficient savings to ensure a comfortable lifestyle in later life. They retire with considerably less superannuation savings than their male counterparts.

Female employees have less than half the amount of superannuation savings of male employees. Why is this? There is a range of reasons; not least of all the fact that they spend considerably less time in the paid workforce, due mainly to caring responsibilities—the raising of children—and frequently earn less income than men, even if they are doing the same job. Considering women spend many more years as retirees, I believe superannuation is probably the biggest financial issue facing Australian women today.

To put a figure on the amount we need for a comfortable retirement is open for argument, but the Australian Superannuation Funds Association suggests that, as a basic rule of thumb, in order to retire at the age of 55, the amount of savings required would be the desired income multiplied by 17, to retire at age 60 the multiplier is 15 and to retire at age 65 the multiplier is 13. Using this rule, a 65-year-old couple living in Brisbane who are maintaining a modest lifestyle living on, say, $25,000 a year, would have had to have saved $325,000. To maintain a comfortable lifestyle, living on, say, $46,200 per year, the couple would have had to have saved $600,600. For a 65-year-old single woman to maintain a modest lifestyle on $17,900 per year she would have had to have saved $232,799, and to maintain a more comfortable lifestyle living on $34,600 a year, she would have had to have saved $449,800. These figures do not take into consideration the age pension, and keep the capital intact, but nevertheless they show that considerable amounts of retirement savings are required for a reasonable lifestyle to be maintained in retirement.

The difference in men’s and women’s superannuation savings is stark. In the 25 to 44 age group, the median superannuation balance for men is double that of women. The median level of superannuation for women aged between 45 and 64 is around $30,000, compared with $66,000 for men between 45 and 54 years of age and around $86,000 for men aged 55 to 64. The next generation of female retirees has far less superannuation than males of the same age. Considering what is required for a reasonable standard of living in retirement, these are pretty sobering figures.

Amongst the Australian adult population, an understanding of superannuation and account balance appears limited, yet it is one of the most important assets we have, usually second to the family home. Often we put it in the too-hard basket, but I believe it is too important not to have a sound understanding of it, as it secures our financial future. I would strongly encourage Australians to come to grips with superannuation, as it is one of the most effective ways to save money to live on in retirement along with being one of the most tax effective investments you can make.

The ageing of our population gives us even more reason to be more proactive with our superannuation and to put in place a plan for our retirement. The ageing of our population is a term we hear a lot of and it is there in the way of background noise. But it is a phenomenon that will have a big impact on our lifestyles, particularly if we do not have a plan for our future. Basically, the ageing of our population has been brought about by the low fertility rates of the past 20 years resulting in a smaller proportion of younger people in the population when compared with older people. This is known as structural ageing. In addition, improvements in life expectancy are resulting in a greater number of people living to an older age. This is known as numerical ageing. The combination of the structural and numerical ageing is now commonly known as the ageing of the population.

In Queensland, our population is projected to increase from 3.6 million in 2001 to 6.4 million in 2051. Our infrastructure is already feeling the strain of being Australia’s most sought after state to live in. Nearly half of this projected increase will be persons aged 65 and over and a further 44 per cent of the projected increase will be persons of working age. In 1971, in Queensland, for every 100 persons of working age, there were approx 17 persons aged 65-plus. By 2051, for every 100 people of working age, there will be approximately 52 persons aged 65-plus. That is a weighty statistic indeed—for every 100 persons, 52 will be aged 65 plus and 48 persons will be of working age.

On a national basis, Australia faces a pronounced ageing of its population over the next 40 years, with one-quarter of Australians aged 65 years and over—double the present proportion. Whilst it is anticipated that taxation revenue will largely track GDP growth, government expenditure is likely to rise more rapidly, placing budgets under considerable pressure, with government spending on health, aged care and pensions growing at a faster rate. The major source of budgetary pressure for Australia at this time will be our healthcare costs, which are projected to rise by 4.5 percentage points of GDP by 2044, up from 5.7 per cent to 10.3 per cent.

Health expenditure in 2002-03 was $43 billion and it is expected to reach $211 billion by 2044-45. Although Australia has world-class health outcomes, most of our health dollar is directed at the acute end, whereas prevention is the key to sustainability. I take the opportunity to urge Australians to make the most important investment of all—that is, to invest in themselves and to take good care of their health. Whatever steps you are taking to keep healthy, do more—a lot more. I firmly believe that the best thing we can do for ourselves and our families is to be mindful of our health, and that includes not taking things too seriously—after all, life is for living, not stressing.

As I have outlined, the ageing of our population is throwing up considerable challenges, and that is being brought home to us by the status of women’s retirement income. In Australia, women comprise over 60 per cent of the retired population and, in my electorate of McPherson, we exceed the national average with over 9,865 women living in the electorate who are aged 65 and over. In 2002, around 82 per cent of the population of age pension age received an age pension or similar payment and 67 per cent of age pensioners were paid the maximum rate of pension. The majority of age pension recipients are women. Women, on average, continue to retire from the paid workforce with insufficient savings to ensure a comfortable lifestyle in later life.

This is not a rosy outlook for baby-boomer females, many of whom have enjoyed financial independence in the past. These baby boomers will experience a fair amount of adjustment, particularly as their expectations of retirement lifestyles is far higher than those of their mothers, who are almost entirely dependent on the age pension. I have no doubt that women are disadvantaged in accumulating adequate retirement savings over the course of their working lives due to their working patterns. Nevertheless, it is never too late to start saving for a retirement.

I encourage women to educate themselves about superannuation and to consider increasing personal contributions. It needs to be remembered that one of the most effective ways to pay into super is to salary sacrifice. Salary sacrificing reduces your taxable income, and the money going in is taxed at a lower rate. Become super-savvy and use and understand this investment strategy.

It is a good thing to remind ourselves that saving for a comfortable retirement is a matter of individual responsibility and choice. The government is meant to be there as a safety net only. The Australian government has made sweeping reforms to superannuation, making it more attractive than ever before, and I urge all Australians, in particular women, to make the most of those reforms.