New research provides another insight into Australia’s persistent retirement-savings gender gap and into what some women are personally doing to lessen its impact.
This research, How Australia Saves – a collaboration between Vanguard and Sunsuper – draws on the transactions and investment experiences of more than a million Sunsuper members.
Researchers found that a higher proportion of women than men made non-concessional (after-tax) contributions in 2015-16.
Women made up 59 per cent of the members making non-concessional contributions into the fund’s default lifecycle option during 2015-16 in addition to their superannuation guarantee (SG) contributions. (The vast majority of Sunsuper’s members are in the default option.)
Male members of Sunsuper have average balances that are about 30 per cent higher than the average balances of female members – a reflection in just one super fund (albeit one of the biggest) of Australia’s retirement-savings gender gap.
As research by actuaries and consultants Rice Warner shows, average super balances are higher for males than females in all age groups. However, the gap “increases markedly” from age 35 when the majority of women take time off to have children and may lose opportunities for promotion at work.
After interrupting their careers to raise families, women often have difficulties returning to the workforce at an acceptable level. And one of the fundamental reasons for the retirement-savings gender gap is that women have lower average incomes than men.
Further, women frequently struggle to restore their finances after divorce because of family obligations and, again, their lower average incomes. Yet women have to stretch their retirement savings over longer life expectancies than men.
As Rice Warner has emphasised, potential solutions for the retirement-saving gender gap will have to come from the combined efforts of government, super funds (with education and advice), employers and individual members.
By making voluntary super contributions as early as possible in their working lives, women can personally help close the gap.
One approach is to try to make higher contributions if possible in the years before taking time out of the workforce to have a family. This can provide a valuable savings buffer for when your salary stops flowing.