At the end of last year, I was excited to learn Finland elected 34-year old Sanna Marin as Prime Minister. As leader of the Social Democrats, she is now the world’s youngest head of a government. What an incredible achievement for such a young woman and an inspiration for the rest of us. Then there’s New Zealand’s Jacinda Adern, globally respected for her ability to role-model strong, present, authentic leadership, while balancing marriage and motherhood.
They are not alone in the long list of women currently reaching for the stars. Recently, NASA astronauts made history completing the first female spacewalk at the International Space Station, 17 year old Greta Thunberg has made global headlines for her tireless campaigning on climate change and our own Young Australian of the Year 2020, Ash Barty, became the highest paid woman in tennis in 2019, with on-court earnings of over $10 million.
And while I am always the first to say there is more work to be done to help the economic progress of women more broadly, inspiring stories about females doing great things help pave the way for a new generation of women, who will strive to “be what they can see”.
For those of us in the financial services industry, one of the biggest challenges we have is closing the retirement income gap. This is not a new problem, but a serious one. We know that women who are more engaged with their finances, including their superannuation, will have a better retirement outcome. And currently the gap for women at retirement, compared with men, is still too wide.
Yet super remains a difficult topic to engage people on. This is because the system is based on delayed gratification; people don’t reap the rewards quickly, and, for a whole range of reasons, we can’t always control its growth the way we want to. While the inspirational women I mentioned above show us what we can achieve in the here and now, when it comes to saving for retirement, Australians struggle to engage with what they can’t see.
As I said, this is not a new problem. Behavioural experts have long talked about the challenges associated with getting people excited about saving for retirement. Simply put, saving into super simply doesn’t spark the same emotive response as buying your first car or home.
Our compulsory superannuation system goes part of the way with 9.5 per cent of our pay being put away in superannuation; but it still doesn’t solve the gender super gap, which exists due to time out of the workforce, particularly for primary parental or caring responsibilities, and lower pay for women across the board.
To address the shortfall, we encourage men and women to engage with their super as soon as they start working. We know that super is often the last thing on a young adult’s mind, but what I say to my kids (and anyone who will listen!), is that the power of compounding interest is very real and produces very real outcomes.
In the finance industry we need to continue working on strategies to help Australians better connect with their futures. It’s up to us to show women in particular how saving for retirement early can help them live a much more comfortable life further down the track.
We need to create retirement role models, so that people can become what they can see.
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