According to research from Australia’s national science agency, the CSIRO, many of us are dying with impressive superannuation accounts thanks to frugally living out our retirement years.
The research suggests that far from enjoying endless river cruises, wine subscriptions and tickets to A Day on the Green, senior citizens are instead withdrawing the minimum from their super accounts each month, or close to.
The advice from economists and from the treasurer, Scott Morrison – back when he was the social services minister – has been to spend up during the final years of life and worry less about having a nest egg to bequeath to the next generation. That’s not what super’s for, they say. Live as well as you can.
But as a woman, and as someone who grew up in a family where losing the family home was, for many years, a legitimate concern, I am sick of the government and their agencies telling me how to save and how to spend.
I have learned to ignore the advice of people like the former treasurer, Joe Hockey, that the only way to buy property is to “get a good job that pays good money”, otherwise it would be tempting to give up saving and accept financial defeat until meeting Hockey’s criteria of a “good job”, which we can assume means earning well into the six-figures.
I am constantly paranoid about running out of money. I know how quickly people can go from being comfortable to being out on the street. Hearing agencies offer advice about how I should approach saving, buying my first home or preparing for retirement is unhelpful and frustrating. And would have got me nowhere had I listened.
When it comes to super, there are a couple of things we know. The average women retires with around half the balance of the average man. This is owing to a number of factors: low-income earners are worse off come retirement, and low-income earners are usually women; it is women who take time off during their career to have children and who then go part-time to care for them; women who get paid less compared to their male counterparts, and women who are less likely to successfully negotiate for higher salaries.
Add to that the fact women have a longer life expectancy than men and will therefore have to make their saving stretch for longer, and it’s easy to see why women, at least, might approach retirement frugally.
There have been countless media reports in the past year about the need to beef up women’s superannuation accounts, and the Senate’s inquiry into economic security for women in retirement has revealed around three-quarters of single women are not able to retire with a comfortable level of retirement income.
Telling people, but especially women, who have managed to navigate all of this successfully to retire comfortably to then spend up and boost the economy in retirement is a bit rich. And in the face of this mixed messaging about saving and spending, it’s no wonder people feel disengaged with and confused by their superannuation.
Unless they have been given a health-related prognosis, no one knows when they are going to die and how long they will need to support their standard of living for. On top of this, it’s impossible to know how a super fund will fare amid the unpredictable fluctuations of the stock market.
Exercising caution and living frugally is surely, then, a sensible approach. It may not be for everyone, and all power to those who want to live well come retirement and rest easy in the knowledge that there will always be a family member to step in and look after them should disaster hit. I also understand the attitude that we’re in the last decades of our lives by retirement age and that we may as well spend up and have a good time.
But for those who live constantly with overdrawn bank accounts, who say “no” to indulgences because they want to scrape together some kind of financial security, and who know they can’t rely on anyone to support them into old age, switching to a “spend spend spend” mentality isn’t going to happen the moment retirement hits.
And for those living out their retirement years struggling to make ends meet and unable to even use a heater in winter because of the cost, I doubt it’s because they’re deliberately living frugally and actually have a wad of cash in the bank.
A more sensible approach for government would be to help people buy property and diversify their assets while they are young. People who retire owning their own home are in a more secure position than those who have never been able to establish themselves in the property market. Perhaps independent financial advice could also be subsidised by the government.
Turning to the women around me for financial advice who, in the face of hardship, uncertainty and tragedy, have managed to scrimp, save and make it on their own has helped me to buy my own place and manage some semblance of financial security, precarious as it often feels.
I’d prefer to listen to people like them, rather than economists, the government and their agencies, when it comes to financial advice about how to spend and save. And if that means dying with a hefty lump sum in the bank, that’s my business.
