Achieving cognitive consonance for women and their super

In psychology the concept of cognitive dissonance describes the feeling we humans have when our actions, ideas or beliefs contradict each other.

Simply, the level of ‘dissonance’ is a measure of the gap between our expectations and reality.

For example, we may experience dissonance when we say we intend to lose weight by watching our intake of fatty foods…but then go out and eat a high fat, deep-fried meal with some rich chocolate cake for dessert! In thinking about retiring, many Australians appear to suffer some form of stress, if not cognitive dissonance.  Many of us have great expectations for a well-funded retirement. The sad reality is that – without some form of adequate and early intervention – such expectations simply won’t become reality. The retirement savings projections are worse for women than men. Rice Warner analysis shows that the retirement savings gap for women of working age is currently at a staggering $383 billion. That’s a massive amount of dissonance to make up.

So what do we do about it? This is a simple question that belies an underlying complexity requiring a range of solutions.  One clear solution is to simply save more, earlier. Voluntary contributions (VC) to super are a no brainer. But are women pulling the VC lever?

Not enough! We recently asked 1500 female members of funds about their attitudes to contributing more to their retirement. The results were presented at the recent Conference of Major Superannuation Funds, in conjunction with Women in Super.

The survey results are telling in their contradictions: nine in 10 women check their super account balance every year. Great, engaged. But only 4 in 10 know what investment option they are invested in. Not so great.

Yes, older women are more engaged than their younger counterparts, but seven in 10 so-called ‘engaged’ females don’t actually know what their retirement income needs are! 

The old adage “fail to plan, plan to fail” comes to mind for this statistic. 

Financial advice is a topic for another blog. But the leading reason women are failing to make voluntary contributions is not just planning; it’s the reality of affordability. Six in 10 females say affordability is a barrier. Women are either directing their discretionary monies to paying off debt, or they have low trust of the superannuation system and have simply tuned out to the messages from their super fund.

Either way, there is a long way to go before the expectation that females in our society may enjoy a comfortable life in retirement matches the reality.

“Cognitive consonance” – when the actions and feelings are aligned – for women and their retirement savings will only come with a more concerted effort by funds to stay alert to engagement levels, build trust and advice models that work, and deploy new technological innovations to segment members and tailor solutions to them.

For more information see the presentation – Female Voluntary Contribution Research.

– Melissa Fuller, Deputy CEO