A hot topic at the moment, particularly in the lead up to the Federal Election, is the disparity between men and women’s superannuation in Australia. On average, women in Australia will retire with around half the superannuation balance of men. Why? Women still earn less than men, even for equivalent jobs, and they are more likely to have a career break to raise children and care for family members such as ageing parents.
According to Jo-Anne Schofield, national secretary at United Voice, “Women face a double whammy in the labour market. They work in sectors that are highly feminised where work is undervalued so their ability to accumulate super is already difficult. As well as that, they take periods out of work to bring up children or increasingly to care for older relatives so that places them at a further disadvantage.”
Chief Executive of Industry Super Australia, David Whiteley, has highlighted yet another issue for the disparity, the fact that the workplace in Australia is now extremely different from 1992 when compulsory superannuation was first introduced. “The main reason why the gap exists is the super tax system has not kept pace with modern society and the modern workforce. It’s designed around men working full time and being the principal breadwinner. This of course is not how today’s workforce and today’s society works.”
Another issue to consider is the number of women starting businesses and spending a great deal of their careers being self-employed. More than 85% of self-employed women have either no super savings or super savings of less than $40,000 (Association of Superannuation Funds of Australia). Research suggests that self-employed women aged 60-64 years of age have superannuation savings of approximately $69,000, around half of that of employed women and less than half the amount held by self-employed men in the same age bracket.
Not only are two-thirds of self-employed women not contributing to superannuation but they are also not engaged in building businesses that would be able to be sold in order to fund their retirement; a situation destined to leave these women at a huge disadvantage when they reach retirement age.
Combine these aspects with a longer life expectancy and you begin to see why women are less likely to have enough to enjoy a comfortable retirement. According to some studies, only 12% of Australian women believe that their super will be sufficient for their retirement and sadly, only half of women know how much they will need for a comfortable retirement.
A recent Senate inquiry has found no short term change to the problem. In fact, the superannuation gender gap is forecast to narrow very little over the next 40 years. It’s important for Australian women to consider their own personal superannuation and retirement plans and remember that a husband/partner is not a retirement plan as it may have been in generations past.
While the gap is largest for women on lower incomes it is prevalent across the board, making it all the more important for all women to seek advice on a retirement strategy as soon as possible. If you need help determining your retirement strategy or simply giving your Super the boost it needs, just get in touch with the Doran Financial Services team.