Super boom widens wealth gap: ‘I thought this would be a stress-free life’
- Replies 28
In the golden years of retirement, many Australians find themselves grappling with the harsh reality of financial instability.
The culprit?
Superannuation—a system designed to secure a comfortable retirement, but which, according to a recent report, is driving wealth inequality in Australia.
Elaine's story is a stark reminder of the growing wealth gap in Australia.
After nearly five decades of dedicated service in sectors like aged care and social services, Elaine retired with $45,000 in superannuation.
Her retirement dream of a peaceful life on her 25-acre property has been replaced by the harsh reality of a mould-infested social housing flat.
Experts said Elaine’s story is typical of several older women who experienced hard times.
She entered the workforce in the 1970s and made $50 per fortnight.
Despite her wage growth over time, superannuation became compulsory only in 1992.
Elaine then realised that there was little to save for her retirement.
‘I worked from two days after my 16th birthday till I was 63,’ she said.
‘I paid taxes for all those years, and now I see no reward for my efforts.’
After her divorce in the early 2000s, she used her settlement money to buy a transportable home.
However, a diagnosis of Cushing's syndrome, a hormonal disorder, led to financial stress, resulting in her downsizing to a caravan park and eventually moving into social housing.
‘I was making some very poor decisions around about that time because of my illness,’ she said.
‘I just thought that this would be a stress-free life, and that turned out to be more stressful than anything. I hated it.’
Elaine later found an apartment, but she could no longer afford the weekly rent of $250 as cost-of-living pressures hit two years ago.
‘I knew I was going to come to that pointy end, where I was not going to be able to afford anything other than the Housing Trust or community housing, Elaine said.
Elaine was grateful for access to social housing and pension. However, she felt left behind.
‘I'm not important in this world. That's how I feel. And I think a lot of other people feel like that,’ she said.
Addressing the Superannuation Gap: What Can Be Done?
A recent Australian Council of Social Service (ACOSS) and the University of New South Wales (UNSW) report revealed that superannuation is the primary driver of wealth inequality in Australia, leading to a gap that has steadily widened over the past 20 years.
The wealthiest Australians retire with at least seven times more in super than those with the smallest balances, a gap that has been widening over the past two decades.
Professor Carla Treloar, the report’s author, said: ‘At the top end of our households [by wealth], they have on average about half-a-million dollars in superannuation wealth.’
‘The bottom 20 per cent households, by wealth, have on average about $66,000 in superannuation assets.’
Treloar also said lower-wealth households relied on superannuation, while the top prospered through their investments, like shares and real estate.
The highest 20 per cent in the country are 90 times wealthier than the lowest 20 per cent.
‘That's a really good pause for thought to see if our policy settings are right to contribute to where we want Australia to be in another two decades,’ Treloar noted.
The gap in superannuation disproportionately affects some Australians.
Linda Elkins from KPMG Australia said women had less superannuation than men because they often ‘dominated the non-paid activities’.
‘We have that gap because superannuation is based on salary and wages, and women have periods of not earning salary and wages due to child-bearing and caring responsibilities,’ she said.
A KPMG report found that women aged 50 to 54 had 32 per cent less super than men on average, while women aged 60 to 64 had 23 per cent less.
This is compounded by the fact that women are more likely to work in lower-paid industries, reducing their super contributions over time.
Elkins suggested that employers should be required to pay the compulsory 11 per cent super contribution during periods of paid parental leave and carer's leave.
She also advocated for tax concessions for women who want to make 'catch-up payments' for their missed superannuation contributions.
The Australian government's inquiry into homelessness two years ago found older women to be among the most vulnerable cohort.
'They might lose their housing, or they have to skip meals, or they have to compromise on looking after their health,' Treloar said.
Despite the challenges, Elaine remained hopeful.
'Honestly, this isn't the end,' she said.
'Something great might happen. You don't know.'
Similar to Elaine, seniors have devoted their lives to fulfilling their responsibilities and striving for a comfortable future in their golden years. However, it is worrisome that there has been a rise in complaints regarding the handling of superannuation claims which has caused unnecessary delays.
In a previous story, the Australian Financial Complaints Authority (AFCA) said that superannuation complaints involving delays in claims handling have jumped alarmingly in the past 12 months. What could be the cause? Read more about it here.
What are your thoughts on the superannuation system? Have you experienced similar challenges? Share your experiences and thoughts in the comments below.
The culprit?
Superannuation—a system designed to secure a comfortable retirement, but which, according to a recent report, is driving wealth inequality in Australia.
Elaine's story is a stark reminder of the growing wealth gap in Australia.
After nearly five decades of dedicated service in sectors like aged care and social services, Elaine retired with $45,000 in superannuation.
Elaine had little to save for her retirement due to superannuation. Stock Image Credit: Freepik
Her retirement dream of a peaceful life on her 25-acre property has been replaced by the harsh reality of a mould-infested social housing flat.
Experts said Elaine’s story is typical of several older women who experienced hard times.
She entered the workforce in the 1970s and made $50 per fortnight.
Despite her wage growth over time, superannuation became compulsory only in 1992.
Elaine then realised that there was little to save for her retirement.
‘I worked from two days after my 16th birthday till I was 63,’ she said.
‘I paid taxes for all those years, and now I see no reward for my efforts.’
After her divorce in the early 2000s, she used her settlement money to buy a transportable home.
However, a diagnosis of Cushing's syndrome, a hormonal disorder, led to financial stress, resulting in her downsizing to a caravan park and eventually moving into social housing.
‘I was making some very poor decisions around about that time because of my illness,’ she said.
‘I just thought that this would be a stress-free life, and that turned out to be more stressful than anything. I hated it.’
Elaine later found an apartment, but she could no longer afford the weekly rent of $250 as cost-of-living pressures hit two years ago.
‘I knew I was going to come to that pointy end, where I was not going to be able to afford anything other than the Housing Trust or community housing, Elaine said.
Elaine was grateful for access to social housing and pension. However, she felt left behind.
‘I'm not important in this world. That's how I feel. And I think a lot of other people feel like that,’ she said.
Addressing the Superannuation Gap: What Can Be Done?
A recent Australian Council of Social Service (ACOSS) and the University of New South Wales (UNSW) report revealed that superannuation is the primary driver of wealth inequality in Australia, leading to a gap that has steadily widened over the past 20 years.
The wealthiest Australians retire with at least seven times more in super than those with the smallest balances, a gap that has been widening over the past two decades.
Professor Carla Treloar, the report’s author, said: ‘At the top end of our households [by wealth], they have on average about half-a-million dollars in superannuation wealth.’
‘The bottom 20 per cent households, by wealth, have on average about $66,000 in superannuation assets.’
Treloar also said lower-wealth households relied on superannuation, while the top prospered through their investments, like shares and real estate.
The highest 20 per cent in the country are 90 times wealthier than the lowest 20 per cent.
‘That's a really good pause for thought to see if our policy settings are right to contribute to where we want Australia to be in another two decades,’ Treloar noted.
Reports revealed that superannuation is the main factor of wealth inequality. Credit: Freepik
The gap in superannuation disproportionately affects some Australians.
Linda Elkins from KPMG Australia said women had less superannuation than men because they often ‘dominated the non-paid activities’.
‘We have that gap because superannuation is based on salary and wages, and women have periods of not earning salary and wages due to child-bearing and caring responsibilities,’ she said.
A KPMG report found that women aged 50 to 54 had 32 per cent less super than men on average, while women aged 60 to 64 had 23 per cent less.
This is compounded by the fact that women are more likely to work in lower-paid industries, reducing their super contributions over time.
Elkins suggested that employers should be required to pay the compulsory 11 per cent super contribution during periods of paid parental leave and carer's leave.
She also advocated for tax concessions for women who want to make 'catch-up payments' for their missed superannuation contributions.
The Australian government's inquiry into homelessness two years ago found older women to be among the most vulnerable cohort.
'They might lose their housing, or they have to skip meals, or they have to compromise on looking after their health,' Treloar said.
Despite the challenges, Elaine remained hopeful.
'Honestly, this isn't the end,' she said.
'Something great might happen. You don't know.'
Similar to Elaine, seniors have devoted their lives to fulfilling their responsibilities and striving for a comfortable future in their golden years. However, it is worrisome that there has been a rise in complaints regarding the handling of superannuation claims which has caused unnecessary delays.
In a previous story, the Australian Financial Complaints Authority (AFCA) said that superannuation complaints involving delays in claims handling have jumped alarmingly in the past 12 months. What could be the cause? Read more about it here.
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