Why Women Have Lower Superannuation Balances

Published: July 26, 2013

Women typically have much less superannuation than men, a report by the Investment Funds and Superannuation Association shows. Here we explain some of the issues behind the findings.

Why do women have less superannuation than men?

The report outlines several reasons:

  • As women have children, they spend less time in paid work and therefore have fewer years to make superannuation contributions.
  • Average earnings of women are less than those of men. This is partly through a larger proportion working part-time and partly through loss of opportunity for career advancement.
  • Through breaks in employment for raising children. Lower income means that superannuation contributions are smaller.
  • Women live longer than men so that their average retirement is expected to be longer.
  • In households where men have been the primary breadwinners, many women have tended to rely on their husband’s income – and therefore, his superannuation. However, an ever increasing divorce rate has reduced the level of financial security for women in these circumstances.

What you can do to prepare

  • Savings plan – Ideally you should get into a regular savings pattern early so you can benefit from compounding returns over time. If you can, contribute more than the 9% superannuation guarantee. Generally, when you’re younger, you experience regular jumps in salary, so make a conscious decision to use some ‘if not all’“ of that pay rise for superannuation.
  • Other ways to contribute- Look at other ways you can contribute, such as making use of:
    • Government co-contribution scheme – can potentially double your after tax contribution if you are eligible.
    • Spouse contributions – your spouse can make superannuation contributions for you
    • Super splitting – your spouse can split part of their superannuation guarantee or other employer contributions to your superannuation funds account. The advantages here are that these contributions will maintain the momentum of compounding returns.
  • How your super is invested- It is also important to look at how your superannuation is invested. If you are concerned or confused about your asset choices be sure to get some financial advice and to help ensure your investments match your risk profile and goals.

Overall, it helps to develop a mindset of financial self-sufficiency. Don’t rely on your husband’s superannuation or his superannuation contributions to get you through.

Women nearing retirement

It’s not too late if you are still working to look at ways to close the gap. At this age, the mortgage might be down, the kids may have moved out and you might have extra cash that you can contribute.

Self-employed superannuation and women

A large number of small businesses are run by women. Is there a link between this and lower superannuation balances? It is typical for self-employed people to think of superannuation after all the other costs of their business. There can be little cash available for extra superannuation contributions.

If you are thinking of your business as your superannuation, then be aware of the opportunities to use the proceeds from your business to top up your superannuation, such as the small business tax concessions that exist outside the standard contribution caps. Getting financial advice to ensure you are properly prepared for these events is important.

Superannuation Facts about Women

  • A typical Australian woman will have $91,400, or 35%, less than a man in their superannuation savings if they have children.
  • A woman retiring at 67 must save an additional 13% more for retirement than a male in the same situation, as she has longer life expectancy.
  • A woman who takes five years out of the workforce to have and raise her children will have 26% less superannuation in retirement than an equivalent woman who has not taken time out of the workforce.

Source: CFS 2010

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