The Prince Charming syndrome

Most women outlive men. But many still rely on males to provide for them in their later years, as DIANA McCURDY reports

Cinderella and Snow White have a lot to answer for. All those years of young girls devouring saccharine fairy stories have had an unexpected side effect.

In a phenomenon colloquially dubbed "Prince Charming Syndrome", a British report has found that 20 per cent of women aged 18 to 34 rely on their husband or partner to provide for them in retirement.

The trend, which has left financial advisers pursing their lips in dismay, is not restricted to Britain. Statistics indicate Kiwi women are equally prone to hoping providence will take care of the future for them.

According to one financial model, by the time the average 15-year-old New Zealand girl reaches retirement, she is likely to have saved only 75 per cent as much as her average male counterpart.

And who can blame her? In the intervening 50 years, she will probably have faced multiple disadvantages, including a student loan (women take almost twice as long to pay off the cost of a bachelor's degree), lower lifetime pay, and taking time out to raise children.

Even the experts acknowledge that Prince Charming Syndrome is not entirely irrational.

Auckland University sociology professor Maureen Baker takes a pragmatic approach to the trend. Like it or not, she says, finding a long-term earning partner is "the most effective way that women can protect themselves in retirement.

"It's logical, it's not stupid, because women on their own cannot earn the same."

By the end of last year, total average hourly earnings of women were 85.4 per cent of those of men. Income gaps are larger for Maori and Pacific women.

It seems little wonder some women find solace in a dream of domestic bliss.

The trouble is that relying on a man is not a guaranteed investment as far as retirement schemes go. "It's logical, but not reliable," Baker says. "You can count on winning the lottery - that's a low probability - or you can count on a man staying with you for life, which is a medium probability.

"Realistically, it's not stupid ... Close to 40 per cent of marriages don't last, which means 60 per cent do."

But if you do divorce - and let's face it, 40 per cent is not a figure to be sniffed at - it sets women even further back.

Divorce affects both parties financially. Men, however, usually bounce back faster than women, especially if they are reaching middle management or beyond. "A woman who's left with children might have received money from her ex-husband, but that won't last long."

The best way for a woman to protect herself from the vagaries of divorce is to have her own earned income, Baker says. She advises women to start thinking about personal savings at 30 or 35 and keep close control over their savings. Personal assets - and the family home - should never be placed in jeopardy by business ventures.

"It seems to me that a full-time job for most of your life is essential - a full-time job with a decent future and promotional opportunities and a superannuation plan."

Most importantly, no matter how in love you are, never operate under the assumption that you will be with your partner forever, she says.

Women in Super chairwoman Louise Gibson is a little more sceptical about the concept of Prince Charming Syndrome. Most New Zealand women have moved beyond such notions, she says.

In saying that, however, she believes most young women still have a fairly distorted view of what retirement will be like.

"In reality, if we stopped women in the street and asked them how much they would get from superannuation as it currently is, most wouldn't know."

So how much do you get? If you're single and living alone, you'll get $245.30 a week in the hand, plus you may be eligible for an accommodation supplement. A couple will receive $377.38 between them.

When you're paying rent, or trying to keep up with the cost of owning your own home, that amount doesn't go very far, Gibson says.

She tells the story of one woman in her seventies who lives on NZ Super. Once her accommodation and food costs are paid, she can afford to go to town only once a week. Recently she had to go to hospital for a day, so that was her excursion for the week.

This woman, says Gibson, has a concession card to the local swimming pool. She uses the showers at the pool so she doesn't need to use hot water at home.

For many young women, the idea of living in such straitened circumstances is inconceivable. "I think that's where people's realities do need to be a little bit adjusted. Jetsetting around the world isn't necessarily something people are going to achieve in retirement. New Zealand Super is breadline stuff."

The barriers to New Zealand women's saving habits, such as student loan repayments, child-rearing and lower pay, are well-known, Gibson says. But no immediate solutions are appearing on the horizon.

Workplace superannuation schemes have steadily decreased to the point where less than 3 per cent of employers provide them - covering approximately 14.6 per cent of workers.

Women are less likely to have access to workplace superannuation schemes due to the part-time or temporary nature of their work, broken service and lower salary levels.

This needs to change, Gibson says. "I guess it comes down to the industry and making sure the industry provides products that are flexible enough to accommodate different circumstances."

In the meantime, it is fundamentally important that women improve their own financial literacy.

Gibson is an almost annoyingly perfect example of what women should be doing. When she first joined the workforce at 18, her employer had a compulsory scheme. Her contributions were deducted from her wages and her employer then contributed on top of that.

By the time she left that job, she had a tidy sum, which she immediately reinvested.

Her most simple piece of advice for women is: the sooner you start saving the better. Even if you can put aside just $10 a week, it will add up over time. Compound interest can have a big effect if you start saving early.

Paying off student debt and saving for a house are important, Gibson acknowledges. "But you can't eat your house in retirement ... People don't really want to downgrade their house once they reach retirement. For baby boomers they have the issue that they are all wanting to sell their houses at the same time."

If dying prematurely is starting to seem an attractive prospect, think again. In the 1950s, if you retired at 65, you probably had only a few years left to live. Now, if you're female, you can expect to live at least another 19 years. It's a long time without earning.

Retirement Commissioner Diana Crossan, however, cuts a swathe through all the gloom. Speaking from her home while in the grasp of a vicious autumnal lurgy, she still manages to paint a brighter picture than Gibson.

From the outset - whether they have saved money or not - New Zealand women are better off than their British counterparts, she says. New Zealand's basic, flat-rate, taxable, individual state pension was a breakthrough for women when it was introduced because it wasn't based on earnings.

Crossan points to the Ministry of Social Development's Living Standards report which indicates elderly New Zealanders face fewer hardships than their younger counterparts.

For some people coming off other benefits, NZ Super increases their income. "There are lots of people who live on it. One third of the population live off it entirely.

"If they own their house, we know that people do okay ... I think people manage for their level of money."

Crossan acknowledges home ownership is dropping in New Zealand. But if people who don't buy houses are saving, then it doesn't matter, she says. So are they saving? She doesn't know.

"Not enough [young women] are preparing ... But I do think we need to be careful about saying things like that to people who can't afford it."

Realistically, you can't expect an 18-year-old fresh out of school to contemplate her retirement, Crossan says. And by the time she reaches her mid-20s, she will very likely be snowed under with student debt. By her mid-30s, she will probably be up to her ears in nappies and a mortgage.

Setting prohibitively high savings targets for young women is unproductive. As often as not, they will simply shrug their shoulders and give up on the idea of retirement savings altogether.

"What I prefer to do is talk to people at their level and talk to them about what they can do."

In Crossan's mind, the victims of Prince Charming Syndrome are probably not women in their 20s and 30s, but divorcees in their 50s.

For women who have happily played the role of housewife most of their adult lives, a late divorce can be catastrophic both financially and socially. These women may have left full-time work to raise children and often work part-time in a low-paying job to help to pay for household expenses.

They may end up with the house, but their husband is likely to have the superannuation package and - probably - significantly higher earning potential in the last decade before retirement.

The important thing to remember, says Crossan, is that any preparation helps. Even in this situation, squirreling away some money regularly can make a difference in retirement.

"If they can do something when they are quite elderly, such as part-time work after retirement, it helps."

Finally, she points out that retirement is not usually an expensive lifestyle. Most people prepare their expectations around the amount of money they will have.

"There are lots of things you do in retirement that don't cost you anything. People start to get involved in things that don't cost: gardening and walking."

Retirement is not, she repeats, all doom and gloom.

Prince Charming may have lost his allure, and Cinderella may not be able to afford to wear silk and gold thread in her dotage. But as long as she stashes away a few serviceable fabrics in her wardrobe, she should be okay.

It's not all Brothers Grimm just yet.