Shift policy focus to single retirees: Willis Towers Watson

Retiring couples hold a significant advantage over single men and women entering retirement, with only one-in-four single women and one-in-three single men expected to reach the Association of Superannuation Funds of Australia's (ASFA's) comfortable level of retirement income.

That is one of the key findings from new research released today by Willis Towers Watson, suggesting that Government policy makers need to look beyond super account balances and towards genuine retirement incomes adequacy.

According to Willis Towers Watson senior consultant, Jackie Downham, a deeper analysis of the household income and labour dynamics in Australia (HILDA) data showed the gender gap in superannuation balances alone did not provide a complete picture of retirement adequacy and that status as either single people or part of a couple should be taken into account.

She said that while the gap in super balances was materially wider for males and females who were part of a couple (compared to single individuals) their combined median projected retirement income is two per cent above the ‘comfortable' level cited by the ASFA Retirement Standard.

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In contrast, she said the median projected retirement income for single males was 15 per cent below ASFA's comfortable level while single females were 23 per cent below ASFA's comfortable level.

"The focus has been on looking at superannuation balances alone and HILDA shows that the gap for males and females who are part of a couple is 50 per cent compared with 24 per cent for single people," Downham said.

"But HILDA provides more detailed information that allows us to consider the differences in projected retirement income based on gender and marital status as well."

"Given that over 70 per cent of people are married/part of a couple, we believe it is important to consider how the superannuation gap and retirement adequacy is impacted by marital status," she said.

"When we look forward using projected retirement incomes rather than focusing on current super balances, the gap between single males and single females narrows, though that is only because single females need to more heavily rely on the Age Pension. The median projected retirement incomes for all singles are well below that of couples, with only one-in-four single women and one-in-three single men expected to reach ASFA's comfortable level of retirement income."

"Given couples are generally more on track to reach a higher level of retirement income adequacy, this would suggest policy discussions should be tilted towards addressing the shortfall in retirement incomes for singles, particularly single women," Downham said.