Five ways you can start to bridge the super gender gap today
But there’s still a long way to go. When it comes to superannuation there isn’t a level playing field for Australian men and women.
Before we look at the gender super gap it’s worth looking at the gender pay gap. In May 2021, women working full-time earned $1,575.50 a week on average while men earned $1,837.00 – a gap of $261.50 or 14.2%i.
Not only do women tend to be paid less, they’re usually the main caregivers, with a staggering 93.5% of all primary carer leave taken by women. In 2018-19, among parents of children aged five and under, only 64.2% of women were in the labour force, compared with 94.6% of menii.
And women can suffer long-term financial effects from starting a family. Women with a child aged two or younger in 2001 experienced an average 77.5% reduction in earnings over the next 15 years, compared with those without children. Men with young children on the other hand faced no significant earnings penaltyiii.
This all adds up to a significant shortfall in retirement savings. The average super balance for a 60-year-old Australian man is $198,482, compared with $165,986 for a womaniv.
The Federal Government’s Retirement Income Review sums it up: “On average, compared with men, women have lower wages, are more likely to work part-time, take more career breaks, and experience worse financial impacts from divorce. These factors contribute to the gender gap in superannuation balances at retirement"v.
Different strokes for different folks
Of course, we’re all different and everyone’s situation is unique. There are many households in which the woman earns more and the man takes on the bulk of the domestic responsibilities. And many Australians are happily single or childfree.
But the facts speak for themselves. On average, Australian women tend to earn less, spend more time out of the workforce raising a family and have less retirement savings as a result.
So whatever your personal circumstances – single or partnered, kids or no kids – you could be faced with a challenge when it comes to generating enough income to enjoy a comfortable retirement, particularly if you dipped into your savings to get you through COVID as part of the Federal Government’s early release of super scheme in 2020.
Getting your retirement plans back on track
But all is not lost… here are five ways women – and men – can start to rebuild their super balance.
- Search for lost super. You may have a few old super accounts from previous jobs. Now’s the time to find them – and even look at bringing them together into one account if that’s right for you.
- Personal contributions. Lockdown has been tough on everyone. And if you’re suffering the financial impact of continuing restrictions, super is probably the last thing on your mind. But if like many of us you’ve given in to the occasional bit of indulgence to help you through – with spending on home improvements, online gambling and food delivery soaring during the pandemicvi – then there might be ways to save a bit extra. If you’re able to curb your spending a little, even a small contribution to super could make all the difference.
- Salary sacrifice. It might not sound too appealing but in the case of super, sacrificing can help you get ahead. Most Aussies will pay less tax on these super contributions than on their income, as well as enjoying the benefits of super’s tax-friendly environment on earnings and eventual withdrawals.
- Spouse contributions. If your partner earns more, they could make a contribution to your super fund and claim a tax offset of up to $540, if eligible.
- Low income super tax offset. If you earn $37,000 or less a year – like many women who work part time while looking after their children – and your employer makes super contributions on your behalf, the government may refund the tax paid on these contributions back into your super account, up to $500 per year.
If you’d like to discuss a tailored approach to building your superannuation, we’re here to help.
©AWM Services Pty Ltd. First published November 2021
i Workplace Gender Equality Agency. Australia’s Gender Pay Gap Statistics. 27 August 2001
ii, iii Retirement Income Review – Final Report, Section 3B, Gender and partnered status, p261, 2020
iv Canstar, How much super should I have at my age, 22 June 2021
v Retirement Income Review – Final Report, Section 3B, Gender and partnered status, p257, 2020
vi Statista, Change in consumer spending per person during COVID-19 pandemic in Australia in March to August 2020, by selected goods and services