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Social contact in older age is vital for wellbeing. Social isolation is a known risk factor for poor physical health outcomes (Cacioppo & Hawkley, 2003) and depression (Hawthorne, 2008), and has been directly linked to ageing, in recognition that ageing presents increased risks of ending up alone through death of a spouse (Edelbrock et al., 2001). Certainly, sharing a household with a partner (or other relative/person) in old age greatly reduces the risk of social isolation, as partners and family living in the household are obvious sources of support.
However, links to the broader community of family and friends who live outside the household are important as well. Contact with family and friends outside the household provides additional support beyond that available in the household, and support for times when relationships inside the household are under strain (such as through separation or death of a spouse). Broader social contact, and the key events throughout the life course that disrupt it, are under-studied components of social isolation. One such event is retirement.
Intuitively, the act of retirement represents one of the most important social dislocations in the life course. The Queensland Government Department of Communities (QGDOC, 2007) interim report on reducing social isolation among older people describes retirement as a critical life event in inducing social isolation, and suggests the current focus of retirement preparation on financial planning should be broadened to address social issues. There are, however, no quantitative Australian studies to date that examine the specific effects of retirement on social contact.
A further complicating issue in examining retirement and social contact is the influence of gender. Some reviews (e.g., Russell, 2007) describe the social disadvantages faced by ageing women, while others suggest that it is older men who are more likely to be isolated in Australia (Findlay & Cartwright, 2002; QGDOC, 2007). An important issue in understanding disparities in findings is recognising the different ways of conceiving social isolation (as a feeling or an actual state) and different ways of measuring it, such as recording frequency of social contact (Australian Bureau of Statistics [ABS], 2007) or duration of time spent with others (Robinson & Godbey, 1997).
This paper will compare retired and non-retired men and women in Australia, in terms of the frequency and duration of social contact with people outside their household.
Social isolation: Retirement, gender and “frequency” versus “duration” of contact
There is a well-established distinction in the literature on social isolation between actual lack of contact with others and social and “emotional” loneliness, which refers to a subjectively perceived lack of contact (Flood, 2005; Green, Richardson, Lago, & Schatten-Jones, 2001; Hawthorne, 2008; Howatt, Iredell, Grenade, Nedwetzky, & Collins, 2004; Van Baarsen, Snijders, Smit, & Duijin, 2001; Weiss, 1982). Many of the recent Australian studies on social isolation have examined perceptions (e.g., Flood, 2005; Hawthorne, 2008). Few studies have examined the actual lack of social contact in Australia beyond basic descriptive analyses (e.g., ABS, 2007), and none in relation to retirement.
Retirement is complex. Smeeding and Quinn (1997) listed several possible definitions, including the end of labour supply, receipt of retirement income, and self-description, but ultimately suggested that retirement should be defined according to the use that is to be made of the term. Others concerned with measuring retirement (e.g., Bowlby, 2007) have agreed that defining it is complex, but have asserted that any definition must capture people of an older age who have generally ceased work.
In a comprehensive review, Weiss (2005) suggested that retirement can be defined according to three approaches. The first two overlap with those suggested by Bowlby (2007): an economic definition, where an older person has ceased work; and a sociological definition, where someone has finished a career and occupies a social niche in which it is socially acceptable to not be working, which can be equated with old age. Weiss also suggested a third definition: psychological, where the person self-identifies as retired. Weiss noted problems with each definition. People who are economically retired may still work part-time or desire further work. Those who are sociologically retired will usually be accepted as such on the basis of age, thereby excluding younger retirees. And those who are psychologically retired may have retired from one job but started another, or continue to work in an informal capacity.
It therefore makes sense to adopt a definition of retirement that incorporates each of these facets of retirement – ending work, reaching a socially acceptable retirement age and perceiving of oneself as retired – so as to include the most appropriate people in the definition. This is discussed in greater detail in the methods section below.
Gender is implicit in many studies of ageing and social isolation. Internationally, Ogg (2005) found that social exclusion, incorporating measures of social isolation, is more prevalent among older women in a range of European countries. Arber, Davidson, & Ginn (2003) found that older UK men have fewer friends, are more socially isolated, are lonelier, and are less likely to have confidantes than older women.
In Australia, women in general perceive that they have greater levels of support, have more friends to confide in, have more contact with family and friends (ABS, 2007) and are less lonely than men (Flood, 2005). Findlay and Cartwright (2002) found a consistent pattern of older men being at greater risk of social isolation, while in a community-based study, Berry, Rodgers, and Dear (2007) found that older women have significantly more contact with friends and extended family than older men. There has been some contradictory evidence, however, with NSW Department of Health data revealing that older men are more likely to visit neighbours at least once a week than older women, consistent across a range of age bands (Centre for Epidemiology and Research, 2006). This highlights the issue of measurement; are measures of frequency of contact sufficient?
Time is an under-used measure of social contact, with no Australian study to date looking explicitly at social contact time among older persons or retirees, and with international studies producing mixed results. Robinson and Godbey (1997) found that older people spend less of their free time socialising, but did not provide details of how they defined “old”, whether being “old” is relevant to retirement age and how ageing interacts with gender. Gauthier and Smeeding (2001) examined data from the US, the UK and the Netherlands, and found that after retirement older people re-orient themselves from work to passive activities (watching TV, reading books and similar activities) and not to socialising. Patulny (2007), in comparing socialising time across nine countries, found that being old and being female both negatively predict socialising time in regression analysis. There are limitations with these studies, however. Most use older data (from the 1980s and 1990s) and do not control for the effects of other variables upon social time.
It is also important to look at the effects of marital status in this mix. Single parenthood and relationship breakdown has been associated with increased incidence of perceived social isolation (Flood, 2005) and social exclusion (Saunders, Naidoo, & Griffiths, 2007) in Australia. However, Robinson and Godbey (1997) found that social contact time is less common among persons who are married and parents of young children. More specific examinations of ageing and marital status suggest that those who are old-aged and single are more likely to be socially isolated (Green et al., 2001; Howatt et al., 2004) and socially excluded (Saunders et al., 2007) and less likely to volunteer (Warburton & Cordingley, 2004). Most of these studies focus on women and ageing; there are no Australian quantitative studies into the effects of retirement upon social contact among men of different marital status.
There is a need then to look at recent recall and time use data to examine the links between gender, retirement and social contact. In this paper, regression analysis is used to elucidate how gender and retirement predict social contact (both separately and in interaction), with the results presented by marital status.
Data and methods
Two national datasets were used in this study: the 2006 Australian General Social Survey (GSS) and the 2006 Australian Time Use Survey (TUS), both conducted by the Australian Bureau of Statistics. The former asked questions about recalled frequency of contact with others, the latter about duration of time spent in the presence of others.
Operationalising the concept of retirement proved difficult because of the problems noted above in using only one of the definitions provided by Weiss (2005). Defining retirement economically as simply being unemployed or not employed (or not in the labour force, NILF) would result in defining younger people not involved in formal work, such as full-time carers and housewives, as retired when intuitively they are not. Defining retirement sociologically as being part of a retired older (65+ years) community would exclude early retirees and include those who continue to work (formally) past retirement age. And defining retirement psychologically according to respondents’ own perceptions was subject to definitional problems. The GSS defined anyone not working or looking for work as “retired”, thus conflating psychological and economic definitions. The TUS definition excluded a range of main daily activities: formal work, informal care and housework, and community participation and voluntary activities. It was thus essentially “leisure-centric”, and excluded anyone involved in useful or social activities that could characterise retirement in a certain age or the sociologically retired.
In light of these issues, for this study, “retirement” was coded to incorporate aspects of all three definitions. The differences between the GSS and TUS definitions of retirement limited the scope to compare completely integrated definitions, but a comparison based on integrating economic and sociological definitions was possible. Retirement was defined in the GSS (model 1) and the TUS (model 2) as: Anyone aged 65 and over who was not in the labour force. This enabled comparison between these two datasets and their different measures.
In addition, analysis was undertaken on a more complete definition of retirement, established in the TUS (model 3), that integrated all three aspects: Anyone aged 65 and over who was not in the labour force or anyone under the age of 65 who self-defined their main daily activity as “retired”.
This definition is still not wholly adequate. It excludes older persons who are psychologically or sociologically retired but work a few hours a week,1 and younger retirees who do not self-define as retired. However, it was the best option available for capturing all the relevant aspects of retirement in this analysis.
An age-restricted subsample was selected for this study. Since the focus of this study is on comparing men and women approaching or passing retirement age, it made sense to remove younger persons (< 45 years), who have very different patterns of social contact from the sample. It also made sense to remove very old people (75+ years) from the sample, to avoid the confounding effects of women outliving men and engaging in greater social contact by default or compensation. Full and age-restricted sample sizes, as well as the number of retired persons by definition, are displayed in Table 1, which shows sufficient sample numbers for the conduct of this study.
The GSS variable used in this study was clearly associated with having face-to-face contact with others: How often have you had face-to-face contact with family or friends that live outside the household?
The variables used from the TUS were constructed from time diaries combining time, presence of others (co-presence) and activity data. The average daily amount of time spent with various others was calculated in minutes, and the main variable calculated in this manner from the TUS was: Time spent with friends/family from outside the household.2
Further variables were calculated to produce, in combination with time spent with family/friends outside the household, a complete set of categories that capture all possible combinations of co-presence. The categories record time spent:
- with non-family/friends (colleagues, neighbours, housemates, other people’s children);
- with household family (partners, children, relatives); and
- with household family and others (friends, family outside the household, non-family/friends).
|Full sample||GSS (no. of people)||6,250||7,125||13,375|
|TUS (no. of days)||6,385||7,232||13,617|
|Subsample aged 45-74 years||GSS (no. of people)||2,763||3,070||5,833|
|TUS (no. of days)||2,845||3,114||5,959|
|Subsample aged 45-74 years, retired persons by definition (models 1-3)||GSS (no. of people) (1)||443||598||1,041|
|TUS (no. of days) (2)||556||713||1,269|
|TUS (no. of days) (3)||762||861||1,623|
As an initial examination, weighted frequencies and means for variables are provided in the results section. A series of ordinary least squares (OLS) linear regressions were also conducted on the key variable of contact with family/friends outside the household.3 4
The main independent variables were sex and retirement status, with binary (dummy) variables coded for being male and being retired. Other dummy variable controls were created to allow for the influence of socio-economic/demographic factors. Notable increases in isolation have been identified in specific contexts of social exclusion, such as among those who are socio-economically disadvantaged on the basis of income, employment and education (Hughes & Black, 2002; Saunders et al., 2007; Stone, Gray, & Hughes, 2003). Controls were thus created for level of education, English-speaking ability, disability, income (personal weekly income), unemployment status, and the presence of dependent children still living at home.
Controls for marital status were essential, and were created to separate partnered persons (married or de facto) from those who were living as single, and those who were separated, divorced or widowed. Both these latter groups are likely to differ from partnered persons in terms of greater reliance on social networks outside the household, though those who have experienced separation may suffer a greater likelihood of insufficiency in their social networks, depending on how recent the separation occurred. Categories were omitted to create a reference category representative of an average, middle-class woman – a middle-income, middle-educated, English-speaking female who was married with dependent children living at home, not disabled, not retired, and not unemployed.
In addition to these controls, interaction effects between retirement status and gender were also tested. An interaction effect examines whether two independent variables such as retirement status and gender have a different effect in combination upon the dependent variable (family/friends social time) than they do separately (Jaccard & Turrisi, 2003).5 For example, the presence of an interaction effect between gender (say, being male) and retirement would suggest that being male changes the way in which retirement influences social time in a way that being female does not. In other words, being male and retired has a distinct effect upon social time that cannot be picked up just by controlling for being male or being retired separately.
Descriptive data presents an immediately accessible picture of social contact, and is useful to examine before jumping straight to regression analysis with controls. Weighted frequencies and means for all variables were calculated and are displayed in the tables below.
Descriptive data analysis
Frequency of contact
Table 2 shows the proportion of people in the Australian population aged 45-74 years who engaged in contact with family/friends outside the household on a daily, weekly, or monthly or less basis, from the GSS data. There were only minor differences between retirees and non-retirees in face-to-face contact, with around 17% of persons in either case having face-to-face contact on a daily basis. The main divide was by gender, with a higher proportion of women (18-19%) involved in social contact on a daily basis than men (around 16%).6 This initial glimpse suggests that gender is the more important factor in determining frequency of social contact.
|Male||Female||All non-retirees||Male||Female||All retirees|
|Monthly or less||26.3||20.4||23.6||23.9||20.0||21.6|
Duration of contact
Table 3 shows the average minutes per day spent with family/friends outside the household and with people in other categories, from TUS data. An interaction between gender and retirement in duration of social contact is visible. Men and women spent fairly similar amounts of time with family/friends outside the household before retirement (70 vs 75 minutes per day), but retired men recorded much less time with family/friends outside the household (53 minutes), while retired women recorded much more (103 minutes).
Looking at the remaining categories of co-presence helps explain how the patterns of time spent with family and friends change. Part of the time went to activities that are necessarily not “social”, such as committed personal time (e.g., sleeping) and time devoted to care or housework. Despite this, there was still substantial variation in different categories of co-present time between retirees and non-retirees. It would seem that when they retire, men free up time previously devoted to work and spend almost the same amount of time with non-family/friends as retired women (51 vs 45 minutes), while non-retired men spend much more time with non-family/friends (such as work colleagues) than women (3.5 vs 2.5 hours). Given that they work less, retired men should have more free time to spend socially with family/friends outside the household. Instead, retired men reported spending more time with the family with whom they live (wives/partners – an increase from 13 to 15.7 hours); a finding strangely at odds with what women report. There was a very large increase in time spent alone for women who were retired (from 4.2 to 6.4 hours), and while non-retired women spent more time with family members in the household (13.5 hours) than non-retired men (13 hours), this reverses in retirement, with retired men spending a lot more time with family members in the household (15.7 hours) than retired women (12.8 hours).
Thus, retired men report a shift towards spending more time with partners, while at the same time retired women report a shift away from time with partners, and towards spending more time alone and with family/friends outside the household.
|Time spent with (co-presence)||Non-retirees
Minutes per dayb
Minutes per dayb
|Male||Female||All non-retirees||Male||Female||All retirees|
|Friends/family outside the household||70.2||75.0||72.6||53.3||102.6||79.6|
|Non-family/friends (colleagues, neighbours, housemates, other’s kids)||209.0||148.6||178.8||51.3||45.1||48.0|
|Household family together with others (friends/family outside the household, non-family/friends)||111.9||137.4||124.6||123.1||124.4||123.8|
Notes: aRetirees are defined as those aged 65+ years and NILF. bEstimates of time spent in co-presence do not add up to 1,440 minutes per day (24 hours) due to the small amount of miscoded or unavailable co-presence data.
Next we looked at how these results change in regression analysis when controlling for gender and retirement simultaneously. Seven models were run in all, predicting face-to-face contact (models 1-3), and time with family/friends outside the household (models 4-6) with retirement defined just as 65+ and NILF, and an additional TUS regression (model 7) for retirement defined to include under-65 and self-defined. The results of the regression can be seen in Appendix 1.
Frequency of contact
With regards to predicting frequency of face-to-face contact with family/friends outside the household (model 1), being male significantly predicted a reduction in frequency of contact of 0.12 points (on a scale from 1 = none to 6 = daily). There was no change when the interaction term between being male and being retired was introduced (model 2) or when socio-economic/demographic controls were introduced (model 3), although retirement became significant and positive. There were clear and strong effects on social contact of controls associated with disadvantage (income, unemployment) and marital status (separated, divorced, widowed), but these did not change the gender and retirement results.
The strong but separate effects of gender (primarily) and retirement status (no interaction) can be seen in Figure 1, which displays mean scores for face-to-face contact predicted from the model. Error bars for each sub-population are included to indicate significant differences, which occur wherever any mean (top of coloured bar) does not overlap with the error bar of any other sub-population.
Notes: Frequency of contact scale: 1 = none, 6 = daily. Retirement is defined as age 65+ years and NILF.
The separate (non-interactive) effects of each variable can be seen in the way that consistent differences in social contact remained between the two genders, and between retirees and non-retirees, even after allowing each of the gender statuses (men and women) to interact with retirement separately in predicting social contact time. In other words, women were always predicted to have more social contact than men, regardless of retirement status, and although the differences between retired and non-retired persons were not as pronounced, retired men and women still had more contact than non-retired men and women respectively. The consistency of these differences is most apparent when only gender and retirement status were controlled for (blue columns), and they remain, despite the differences narrowing, after gender/retirement interaction effects and controls are introduced (grey columns).
Duration of contact
The TUS regressions revealed the strong effect of marital status upon duration of social contact outside the household (discussed further below), but in contrast to the GSS results, an interaction effect between gender and retirement was also present.
Looking just at gender and retirement (model 4), the coefficient for being male predicted a significant decline of 14 minutes per day in time spent with family/friends outside the household, while being retired had no effect in itself; a result similar to the frequency of face-to-face contact regression. However, adding the interaction term (model 5) rendered gender non-significant, while the interaction predicted a significant decrease of over half an hour per day (35 minutes) in social contact. These effects held up when other demographics were controlled for (model 6), although retirement status was no longer significant.
The interaction effect can be seen in Figure 2, where mean scores (and error bars) for time spent with family/friends outside the household are displayed. Before interaction and controls were included (blue columns), there were obvious separate gender and retirement effects similar to those recorded for the GSS analysis above, with men spending less time with family/friends outside the household than women, and retired men and women spending more time than non-retired men and women respectively. However, after interaction and demographics were controlled for (grey columns), substantial differences opened up between retired/non-retired women and retired/non-retired men; retirement affects each gender’s social time differently. Retired women recorded a big increase in time spent with family/friends outside the household, while retired men recorded a decrease. The gap between non-retired men and women narrowed considerably (but remained significant).
Note: Retirement is defined as age 65+ years and NILF.
Marital status also had a substantial impact on amount of social contact time. Figure 3 shows mean scores according to whether the respondent was partnered, single, or separated/divorced/widowed. With this analysis limited to the TUS, calculations were made using the full definition of retirement status, including self-defined retirees. Partnered persons spent substantially less time in social contact with family/friends outside the household, while single persons spent considerably more, and separated/divorced/widowed persons spent the most. This is in keeping with the relatively greater support needs associated with not having a partner. A comforting observation is the resilience of those who were separated/divorced/widowed; they showed no sign of lessened social contact with family/friends outside the household in comparison to other groups.
Notes: Retirement is defined as age 65+ years and NILF, and < 65 years and self-defined.
Despite the powerful influence of marital status on social contact time, the interaction effect between retirement and gender remained. In all instances, retired men had less time with family/friends outside the household than non-retired men, while retired women had more time with family/friends outside the household than non-retired women. Retired men also had significantly less time with family/friends outside the household, for all marital status groups. The few prominent differences based on marital status were that among those with partners, retired women spent much more time with family/friends outside the household than anyone else; among singles, retired women had similar levels of contact to non-retired men; and among those who were separated/divorced/widowed, non-retired men had the most contact with family/friends outside the household.
This suggests that men rely substantially more than women upon their work-based networks for social contact outside the home, and that retirement has an impact upon this kind of social isolation among men, regardless of their marital status. However, the impact is likely to be more detrimental for single and separated/divorced/widowed men because of their lack of support from partners, family and friends in the household relative to other men and women of similar marital status.
This study set out to examine the levels of social contact among Australian men and women in retirement, comparing frequency and duration of social contact. In looking at frequency of social contact, gender seems to be a more important factor than retirement, in that descriptive and regression analyses show men having less frequent social contact and a greater risk of social isolation than women, whether comparing retired men and women or non-retired men and women.
However, in looking at time spent in contact with family/friends outside the household, the interaction between being male and retired had a greater impact on social time than either variable did separately. Descriptive means show more solitary time spent among retired men and women, more social time spent with family/friends outside the household for retired women, but less social time for retired men. Regressions controlling for the male/retired interaction – or allowing one gender (male) to change the way retirement influences social time differently from the other gender (female) – confirms this pattern, indicating that retired men had less social time than non-retired men, while retired women had more social time than non-retired women. In addition, despite marital status having the largest impact on contact with family/friends outside the household, the negative effect on social contact of the interaction between being male and retired still remains.
Discussion and policy implications
There are certain methodological limitations to this study. The disparity in men’s and women’s recorded diary time with each other may relate to inaccuracies in recording time, since women show a propensity for better completion of time diaries (Egerton, Fisher, Gershuny, Pollmann, & Torres, 2004). However, this would indicate that men are reporting time spent alone as time spent with family/partner in the household; retired men would therefore still clearly be less social. Another potential problem is the conflation between retirement and age, in that effects attributable to the act of retiring here may simply be a result of getting older; however, the TUS sample does contain some early retirees, and both samples exclude older workers, so the sample here is certainly not synonymous with old age.
A more serious limitation is “omitted variables”, or the models not controlling for all appropriate covariates.7 One particular set of controls that are missing are indicators of birth/generational cohort, in that behaviours may be attributable to generational differences (i.e., there may be an antisocial cohort of men), rather than ageing or retirement per se. One way to test this – and to test the actual effect of retiring over time, as opposed to comparing groups of retired and non-retired persons – is to use panel data. However, all Australian time use data is cross-sectional, and cannot observe changes, make causal inferences or control for omitted variables through fixed effects models; such panel studies are beyond the scope of this paper.
Other limitations stem from the definition of retirement. Analyses relating to the GSS exclude all early retirees (under 65), analyses relating to the TUS exclude early retirees who do not self-define as retired, and all analyses exclude retirees over 65 who work a few hours a week or are looking for work. Excluding early retirees and “late workers” may depress the social activity of the retired sample, in that early retirees are more likely to have retired for lifestyle (social) reasons, while late workers will retain social contacts with colleagues. On the other hand, however, early retirees may miss out on socialising with a “retired community”, and late workers may lose time for socialising with continued involvement in work. These limitations cannot be tested with the present data.
Regardless of causal and definitional issues, however, the present findings suggest substantive issues exist concerning social isolation and exclusion among older, non-working, retired men. A brief review of the intervention literature suggests possible responses. Findlay and Cartwright (2002) noted that early intervention support groups and structured group interventions have had some success in reducing social isolation, along with linking young families and isolated older persons, setting up community-based common projects, “gate-keeper” projects to identify at-risk older people, and old-young home-share programs. In a review of interventions evaluated using control-group methods, Cattan, White, Bond, and Learmouth (2005) found that programs such as education, counselling, self-help and hobby (self-activation) groups in community centres produced significant improvements in social contact. Mentoring, volunteering, education on social isolation on health, targeted activity groups, transport and centralising service delivery have also been suggested as important techniques in reducing social isolation (QGDOC, 2007). These and similar initiatives should be considered with regard to their specific application to men post-retirement in Australia.
0ver 55, aged care, aging, baby boomer, dianapowney, employment, housing, living, money, over 55, pension, property, real estate, retire, retirement, retirement living, savings, superannuation, wilson agents
The recent conclusion by Fair Work Australia that there was a gender pay gap for community services employees in the private sector was greeted with delight by some groups and gloomy predictions by others.
The concerns about major pay increases causing havoc and leading to job cuts in the sector are probably somewhat exaggerated, although of course there will be repercussions from the decision (Fair Work did not set actual pay rates and will hear further argument in August).
But surely the longer-term benefits for the women, who make up about 87 per cent of workers in this sector, are also worth noting.
Community service workers not only do incredibly important work, quite a lot have formal qualifications, too. There must be a greater incentive to pursue a career in the sector when there is an improvement in pay rates.
One of the reasons women end up in such poor financial condition near retirement then have to rely on the government pension is that their work record has been broken or in casual roles, and they are often employed in sectors with low pay, making it difficult to put aside superannuation contributions.
This is a legacy of a wide range of factors: women’s relatively recent entry into education and paid work, while continuing to shoulder the bulk of unpaid domestic labour; and the lingering notion that women will be “looked after” or their incomes are secondary to the main breadwinner.
The effect is tangible and worrying, particularly with an ageing population. Australian women still lag well behind men in accumulating superannuation savings.
Women have only 60 per cent of the personal savings of men – on average, women have just $79,100 while men have $132,200 – and alarmingly women only have half the super of their male counterparts in all age groups from age 35 onwards, according to the 2009 report, Don’t Stop Thinking About Tomorrow, by the National Centre for Social and Economic Modelling and AMP.
The gender divide in Australia has narrowed over the past 20 years but there is much more to be done as a man still has the potential to earn $2.4 million over a lifetime compared to a woman who earns nearly $1 million less, an earlier report by NATSEM/AMP, She Works Hard For The Money, stated.
It is predicted that the savings gap between men and women will narrow in the next few decades. But women are still disproportionately represented in low-income, unskilled casual work, which means they are a particularly vulnerable group when it comes to lower retirement savings.
Nevertheless, awareness among women of the importance of financial security is growing. The banks and other financial services organisations are waking up to this, finally, and have begun targeting women with information, advice and specific products.
It’s not surprising that the level of attention is rising. A whole cohort of baby boomer women is approaching retirement and finding their future is precarious.
Women over 50 are not wasting sleep worrying about wrinkles, according to research by Huffington Post blogger Barbara Hannah Grufferman.
Conventional wisdom might say that women over 50 are most concerned about how they look, and there’s big business in convincing us that these should be our focal points, she writes.
“Women often feel invisible once they are over 50 but that isn’t a gut-wrenching fear. It’s an observation that most women I know shrug off with a knowing smile.
“When I asked them to share their worst fear, none of these issues came up. It’s clear that these women who are out there working, taking care of their families and contributing to their communities have something much bigger than crow’s-feet on their minds.”
Turns out the one common thread was the fear of not having enough money as they get older.
first published financial review July 2012
On January 21 The Productivity Commission released a draft report “Caring for Older Australians” outlining a number of key recommendations for the aged care industry.
As the Australian population ages the demand for more aged care services and care staff will dramatically increase. By 2050, the number of Australians aged over 85 is expected to increase from 0.4 million in 2010 to 1.8 million.
For a long time now we have heard that many aged care providers have been struggling to cope under the current financial model. Most aged care providers welcomed the Productivity Commission’s recommendations.
The key changes that received the most media attention were those relating to the need for older people to contribute more to their cost of care and accommodation. Using wealth wrapped up in the family home to fund aged care has always been a contentious topic. But it seems there has been a shift in thinking.
As our Babyboomers reach old age there will be a sharp increase in the demand for aged care services. Babyboomers have high expectations of aged care services and many are financially secure. Thanks to new medical technology, they will no doubt live longer. This places extra pressure on family caregivers both emotionally and financially.
Over the last decade there has been an increase in the range of care services available in the home but access can be delayed and availability of services can be limited. Care packages can vary greatly depending on where you live, your assets and your ability to pay.
But the availability of informal carers is set to decline forcing people with chronic illness out of the family home sooner. A dwindling aged care workforce will also have problems keeping up with demand.
So how can we ensure all Australians receive the care they deserve regardless of their wealth? How much should we have to contribute to aged care?
In a media release The Productivity Commission proposed the following reforms:
The focus is on enhancing the wellbeing of older Australians — promoting independence, connectedness and choice. Under the proposed reforms, older Australians would:
- receive a flexible range of care and support services that meet their individual needs and that emphasise, where possible, restorative care and rehabilitation
- contact a simplified ‘gateway’ for: easily understood information; assessments of care needs; assessments of financial capacity to make co-contributions; entitlements to approved services; and care coordination — all at a regional level
- choose, where feasible and appropriate, to receive care at home or in a residential facility and choose their approved provider
- contribute in part to their cost of care (with a maximum lifetime limit) and meet their accommodation and living expenses (with safety nets for those with limited means)
- have access to a government sponsored equity release scheme to pay for their care and accommodation charges if they have assets but limited annual incomes
- choose between paying a daily charge or an equivalent bond for the accommodation costs of residential care — with both aligned to the real cost of accommodation
- retain their age pension when selling their home (and if paying a lower capital sum or a daily charge for their new accommodation) by purchasing an Australian Pensioners Bond choose whether to purchase additional services or a higher quality of accommodation if that is what they want and can afford to do so.
Safety and quality standards would be retained but current limits on the number of residential places and care packages would be removed, as would the distinctions between low and high care and between ordinary and extra service status.
A new independent regulatory commission would transparently recommend to the Government the price for care services and for standard accommodation for supported residents, be responsible for quality accreditation, and address complaints.
The Australian Government would manage its fiscal exposure by setting the criteria for needs assessments, the resource levels for approved services, the co-contribution schedules and the standard for basic accommodation.
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Not having sufficient funds for retirement is a cause for alarm among Baby Boomers in Australia with more than half expecting to run out of money after retiring.
According to the latest RaboDirect National Savings and Debt Barometer, Baby Boomers expect to retire with $400, 000 in superannuation – which is half of what they think they will need to fund a financially secure retirement.
Also of concern is that super funds have reported very modest returns for End of Financial Year, up at just 0.5%.
Renee Amor, spokesperson for RaboDirect said “Australia’s ageing population is showing worrying signs about being significantly under-prepared for retirement. Our most recent Barometer shows that even if Baby Boomers doubled their superannuation balance between now and retirement, they would still only have approximately half of what they need. There also seems to be a huge disparity between the returns being made in these markets and what boomers with super believe will happen in terms of retirement funding return.”
The issue of Boomer Australians carrying debt into retirement is also a matter for individual concern and action based on a person’s circumstances.
Ms Amor went on to say, “Put a savings plan together; ensure your hard-earned cash goes into true-to-label high interest savings accounts that don’t charge fees; and start to engage with your super fund and if it isn’t performing for you, speak to a professional about which funds and investments best suit your life stage and financial needs.”
- Baby Boomers expect to retire with $400,000 in superannuation – which is half the amount they think they need. They currently have $200,000 in funds
- Despite share market turmoil and their proximity to retirement, on average Baby Boomers still expect their super balance to double between now and their retirement
- Even if Baby Boomers doubled their super balance between now and retirement, they acknowledge that it will only give them around 50% of what they need
- As a consequence, 57% of Boomers believe they will run out of money during retirement (compared to 48% Gen X and 31% Gen Y)
- Only 32% Boomers are saving for retirement (29% of Baby Boomers say they are saving for a holiday)
- 22.7% Baby Boomers think the government has the primary responsibility, outside of themselves, for ensuring they have a financially comfortable retirement.
first published July 2012 Seniors Living.
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MISINFORMATION and rumour about how the aged care regime will force fire sales of family homes to pay nursing home bonds of $2.6 million is “emotive rubbish and spin”.
In fact, financial planner Eric Hiam says, fire sales rarely happen and the average bond, in any case, is closer to $350,000.
The high claims were made when Julia Gillard unveiled her $3.7 billion aged care plan in late April.
Hiam dismisses such loaded statements, saying they lead people to choose periodical payments over an upfront bond to an aged care facility.
But doing so can leave people financially worse off, he says.
In reality, you (or rather your estate) will get the bond money back in the end. OK, there will be an amount discounted for the time spent in the home, but that is only to a maximum $19,000.
“There is a lot of misinformation out there,” Hiam says.
“People think they will lose the bond, but at the most they will only lose $19,000. Some wrongly think you have to sell your home in two years and have actually acted on that misinformation, to their financial detriment.”
Hiam has been passionate about aged care since 1999. As chief financial adviser of Clearview Retirement Solutions back then, he wanted to promote this area of advice and found he had to strike out on his own to do so.
Seven years ago he established Balance Financial Solutions, which specialises in aged care advice. In those seven years he has seen 3800 families facing the issue of finding aged care facilities. His clients are generally children of parents aged 85 to 105 who need to enter a home.
“When our clients first come to us they are confused and anxious about how aged care works and want to know how best to fund it,” Hiam says. “They are looking for financial efficiency. We find a solution that meets their objectives.”
But unlike many financial planners, his solutions are not product-based but strategic. It’s not about investments but finding a financial solution that works for the aged care resident and their family, he says.
“There are a lot of hidden traps, with the various forms and the incomes and assets tests,” Hiam says. “The advice I give is more Centrelink-based than tax-based.”
On average, Hiam estimates, he can save many of his clients between $3000 and $25,000 each year merely by choosing optimum strategies.
“We usually obtain pensions for people or increase their pensions, when they didn’t think it was possible,” he says.
One example was a woman in her 90s, with no children, who had dementia but was physically fit. She was in an aged care facility making periodic payments for the bond valued at $450,000.
She actually had $929,000 in her bank account earning a paltry 0.2 per cent but had been afraid to use that money to pay the bond outright as she thought that would reduce her income.
Hiam suggested she take the $450,000 out of the bank and pay the bond. That meant she had less money to earn interest, but then she no longer had to pay almost 11 per cent a year in interest on the periodic payment.
Hiam approached the bank saying that they would keep the balance of almost $500,000 with the bank, but only if it could provide a better option. The bank offered 8.6 per cent for three years (admittedly this was back in 2007).
Hiam achieved a saving of $68,000 in interest a year on the bond and in income-tested fees for the woman, and her money was now yielding an extra $40,000 in income. She was more than $100,000 better off.
Of course, every case is different, but Hiam’s strength is knowledge of how Centrelink works and how the aged care system interacts.
Most of his clients see him or one of his consultants for a two-hour session in which he comes up with a series of strategies to choose from.
There is no financial plan, as he does not offer investment advice but explains the intricacies of Centrelink and aged care. It is an aged care consultation from a financial perspective.
“I am helping people to make informed choices,” he says.
Aside from the bond, Hiam says, there can be estate planning issues, particularly if the spouse in the aged care facility outlives the spouse in the home.
“When that is the case, the aged care patient ends up with all the assets and this can change the pension entitlement and the daily care charges,” Hiam says. “In such cases, it might be wise to consider changing wills so the assets are left to the children or a testamentary trust rather than the surviving spouse.”
Aged care will continue to be an issue, with governments (of all persuasions) needing to reduce the level at which they subsidise aged care, while the community will be demanding better facilities.
“We will end up contributing more for the cost of care, although there will most likely have to be a safety net for those who genuinely can’t afford it,” Hiam says.
The latest government package, to be introduced in 2014, is not very different from the present offering, although that may appear so because there is not much detail at the moment. Whatever changes are made, it is clear demand for aged care will increase as baby boomers move into retirement.
Hiam relishes the fact the advice he gives is not premised on achieving sales target but financial efficiency.
first published May 2012 The Australian.
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Westpac today released the findings of a national survey which says more than half Gen Y women are delaying marriage and children until they are financially prepared.
The survey of 900 Australian women across three generations contained in the Westpac Report on Women’s Finances by Generation has revealed that Gen Ys are more financially focused than previous generations, with Gen X and Baby Boomers showing signs that they wished they had done things differently.
Westpac Director of Women’s Markets, Larke Riemer, said it is positive to see that so many Gen Y women are conscious of the financial and career implications of having children and getting married.
“It is interesting to see that Gen Y women place such a large emphasis on the monetary side of marriage and starting a family.
“Our report has revealed that 53% of Gen Y women feel to some extent they need to delay starting a family due to financial pressures, compared to Gen X (30%) and the Baby Boomers (15%). Gen Y are financially focused and preparing for the future,” Ms Riemer said. “That said, young women should arm themselves with as much information as possible to make their money work harder for them from day one.”
Finances ahead of family
• 53% of Gen Y women feel to some extent they need to delay starting a family due to financial pressures
o Gen X (30%)
o Baby Boomers (15%)
• Over half of Gen Y women (56%) said that the financial security of their partner is an important factor when deciding to get married
o Gen X (40%)
o Baby Boomers (24%)
• 53% of Gen Y women said they would go back to work following the birth of a child to maintain career progression
o Gen X 27%
o Baby Boomers 15%
• 36% of Gen Y women would not get married until they had enough money to afford the wedding they want
o Gen X (14%)
o Baby Boomers (4%).
Savvy savers and conscientious career women
• Gen Y are the biggest savers, with 18% of Gen Y saving more than 20% of their income per month
o Gen X (8%)
o Baby Boomers (9%).
• 29% of Gen Y’s already own their own home
• 58% of Gen Y said they would like to make it to the top in their career
o Gen X (34%)
o Baby Boomers (24%)
Ms Riemer said, “It is important that women feel empowered to make the best financial decisions at each stage in their lives. Our research shows that 49% of Gen Ys seek financial advice from friends and family first, which means they may not take the important step of seeking professional financial advice. In some cases, women may find they don’t need to delay marriage and family for as long as they think, simply by tweaking their financial plans slightly,” said Ms. Riemer.
The report also indicates Gen Y women are placing significant importance on the financial security of their partner. 56% of Gen Y women responded that their partner’s financial security is an important factor when deciding to get married, which was less than Gen X (40%) and significantly less than the Baby Boomers (24%).
“While they are still building their wealth, the research suggests Gen Y women understand they need to be financially prepared before they get married and start families, but the priority they place on the financial security of their partner worries me. They need to know a man is not a financial plan”, said Ms Riemer.
Interestingly, the results highlighted that Gen Y are the biggest savers, with 35% of Gen Y women saving 11% or more of their take home income compared to 23% of Gen X and 24% of Baby Boomers. Impressively almost one-third of Gen Y’s have already entered the property market.
In contrast to Gen Y’s focus on finances, over 61% of Gen X said they wish they had started saving earlier for a new home. Interestingly, being able to afford children wasn’t a top of mind concern for Gen X women when they were preparing to have them, with only 26% noting finance as a consideration. However, with over half (50.3%) Gen X respondents revealing they thought they were in a worse position financially than they expected – indicating financial planning is an issue for this generation. This continues to flow onto their concerns about retirement, with 44% of Gen X saying they wished they had done something different with their superannuation.
“For Gen X I want to reinforce that it is never too late to start getting your finances into better shape by setting realistic financial goals, which can be met. Women just need to arm themselves with as much information as possible to help them to get to where they want to go,” said Ms Riemer.
Ms Riemer belongs to the Baby Boomer generation and understands her generation’s financial concerns now focus on retirement and guiding their children.
“I find it very interesting that 35% of Baby Boomers are somewhat disappointed with their children’s choice in partner, and furthermore, over 20% were disappointed with their children’s decisions about starting a family. The most important thing to Baby Boomers is to ensure our children are financially independent in order to take up as many opportunities as possible, even if we do wish that giving us grandchildren was more of a priority.”
Westpac’s top three financial tip’s for Gen Y women:
1. Time is your best friend when it comes to your financial future, start thinking about it now.
2. Put aside at least 10% of your income for long term wealth accumulation.
3. Invest in your education.
Westpac’s top three financial tip’s for Gen X women:
1. If you have a mortgage, focus on repaying it.
2. Get good advice on insurance and estate planning. In particular consider trauma and income protection insurance – only 5% of Australian families are adequately insured.
3. Know where your super is and consider your long term retirement plan now.
Westpac’s top three financial tip’s for Baby Boomer women:
1. Make sure you are salary sacrificing and building up your superannuation.
2. See an adviser about your retirement plan and ensure you have a plan in place.
3. Focus on transitioning your wealth into super by age 60.
These findings come as Westpac celebrates International Women’s Day. For the second year running, Westpac is a major partner with UN Women on International Women’s Day.
Survey results sourced from: Westpac Report on Women’s Finances by Generation, February 2012, powered by Coredata.
Older single women on low incomes and in poor health bore a major brunt of the recent global financial crisis (GFC) in Australia, according to new research released by National Seniors Australia today.
The results of a recent survey, conducted by the National Seniors Productive Ageing Centre, showed that 40 per cent of participants considered themselves to be “worse off” after the onset of the GFC in late 2007, despite Australia weathering the financial storm better than most other countries.
Of those living alone, a total of 45 per cent of women reported being negatively affected by the GFC, compared to 38 per cent of men.
Around half the employed baby boomers surveyed, who had not yet retired, said they had been affected by the GFC and therefore needed to delay their retirement because they did not have enough money to give up working.
Those who were already retired but unable to return to work to restore their bank balance, because of poor health, said they had no choice but to cut spending and wait until economic conditions improved.
These results stood in stark comparison to the 27 per cent of survey respondents who rated themselves as being ‘financially secure’ and confident of their future, despite the impact of the GFC.
“Women, older baby boomers, retirees, and those in poor health reported the lowest levels of household income and have been identified as the most financially insecure following the GFC,” the report states.
“It is these groups that are most at risk for poverty in later life, particularly if financial markets are slow to recover or new financial crises arise.”
The aim of the report, Ageing Baby Boomers in Australia: Understanding the effects of the global financial crisis, was to examine the effects of the GFC in order to better inform positive action for protecting baby boomers’ well-being in retirement.
According to the research, the GFC “undoubtedly triggered working baby boomers to rethink their retirement plans and preparations and, to a lesser extent, retirees’ plans to return to the workforce”.
“For example, some working baby boomers have decided to make more voluntary superannuation contributions, while others will withdraw their superannuation balances early at the expense of tax bonuses down the track.”
The GFC also impacted upon baby boomers’ life satisfaction, retirement optimism and expectations of health care. “Whether their retirement will be as good as expected will depend, in part, on the health care they are afforded by future governments.
“This is where opinions differed greatly across the sample generally and across those who were affected and not so affected by the financial crisis.”
She believes those at the greatest risk of being negatively affected by the GFC are older adults on “low incomes, those on part-pensions and people who do not own a home, because they have nothing to fall back on financially”.
“The majority of whom,” Dr Bridge added, “are women.”
Dr Bridge also confirmed that previous, separate research clearly indicates a relationship between financial vulnerability, home ownership and low income levels.
“Less money in the pocket means that people will have to move further away [from where they have lived] to find cheaper accommodation so they end up further away from the services [they used to receive in their own community].”
This, she said, could all impact upon an older person’s physical, mental and emotional health.
“Older single women have always been at a greater risk of financial vulnerability. It’s just that the GFC has made [their vulnerability] more apparent.”
The Benevolent Society’s general manager for ageing, Barbara Squires, said the National Seniors survey results come as no surprise.
“It’s well known that women enter retirement with less superannuation than men,” Ms Squires said.
“The most severely affected are women who were in and out of the workforce raising children, often working part time and who then separate from their partners.
“The Benevolent Society is particularly concerned about the increasing number of women entering retirement who don’t own their home.
“They have either they’ve never been able to buy their own home, or they have lost it due to a marriage break up.
“More people are going retirement still paying off a mortgage. There’s already a great shortage of affordable housing for rent or purchase, and we’re going to need a lot more in the future.
“The fastest growing group of homeless people is older single women, and this will only get worse without a lot more affordable housing.”
Ms Squires comments on dwindling home ownership rates are backed up by statistics in the peer-reviewed Australian Housing and Urban Research Institute (AHURI) paper, Age-specific housing for low to moderate-income older people, released late last year.
According to the AHURI paper, only one in 40 people aged 65 and over will own their own home by 2050 (read AAA article by clicking here).
It also implies that home ownership could become a thing of the past in the near future, with projected home ownership rates due to drop dramatically over the next 40 years, forcing non-home owners to continue working well into the traditional retirement years to pay the rent or continue paying their mortgage.
Future proofing against further vulnerability
The National Seniors Australia report called for researchers, governments, and employees to place a greater focus on the “more vulnerable groups” like older, single women when creating policies to “future proof” against future financial crises.
It also suggests that employers and governments need to concentrate on making workplaces more welcoming to older workers.
“One of the best ways to do this is to reduce ageism in hiring practices and work cultures,” the report states.
“In any future financial crisis, those needing to reenter the workforce or prolong their working life should not face entrenched negative attitudes to older workers.
“…Plummeting superannuation reserves during the GFC caused distress and anxiety and changed retirement plans for older Australians.
“Superannuation needs to be easily understood, with transparent investment options and reliable advice.
“Employers, unions and governments should work together to make this happen.”
Finally, the report recommended that more programs be developed and promoted to help older people stay healthy and socially engaged.
Not only are these programs important for the well-being of older people, but in the case of a future financial crisis, they will help older adults prevent or deal with financial stress by remaining active, engaged and socially resilient.
National Seniors’ chief executive, Michael O’Neill, said baby boomers were a resilient group who should be encouraged to keep working and stay healthy and active.
“Baby boomers applying for jobs are disadvantaged by ageism and negative attitudes still held by many employers,” Mr O’Neill said.
“It’s in the interests of governments and the boomers themselves to have policies in place that counter these attitudes, along with transparent investment options and reliable advice that will allow them to better cope with any future financial crises.”
BABY boomer women who retire will have just two years’ worth of savings to live on, a report shows.
The story is not much better for men in their late 50s, who would have just five years of survival funds.
The Melbourne Institute said the findings endorsed the Federal Government’s plan to increase superannuation savings from nine to 12 per cent via a resource tax.
But with Labor struggling to sell its controversial so-called resources super-profits tax plan, study author Roger Wilkins suggested Australians delay their retirement.
“Later retirement both increases savings at retirement and reduces the number of years spent in retirement,” Professor Wilkins said.
The Household, Income and Labour Dynamics report, released last year, found single, baby boomer women to be in the most dire situation.
It found their projected median savings would fund just two years of their retirement, even though they had another 21 years of life expectancy.
Unattached men aged between 55 and 59 had just five years of retirement savings, despite being expected to live for 17 more years.
Partnered men and women were in a better position, but still had insufficient retirement funds.
Men in this group had a median shortfall of four years while women were a decade short of having adequate savings.
The study analysed Australian Securities and Investments Commission data and a 2007 Melbourne Institute survey on income, superannuation and retirement.
first published news.com.au