Let's start at the beginning:
At a disparate 16%, the gender pay gap gets a lot of airtime. The superannuation gap however isn’t as widely broadcast or understood. Perhaps because it is horrifying. Perhaps it’s because the concept of super is so far into the future for most people that it isn’t deemed worthy of thinking about right now. Or perhaps it’s because there’s a misconception that a man is a financial plan.
Let it be known that women, on average, are retiring with 47% of the super balance that men have (Source: ASFA).
😱 😱 😱 47 per cent! 😱 😱 😱
Why does this matter? How can it not!
Superannuation is there to be our salary when we retire.
As a result, what we’re seeing is that when it comes to retirement age, women are facing an insecure future and are at greater risk of experiencing poverty, housing stress and homelessness in what should be their golden years.
There are numerous factors as to why the superannuation gap is so extreme. Apart from women earning less to begin with (making a direct impact as superannuation is a percentage of your salary so lower wages mean lower super payments from your employer), women are more likely to participate in part time work, enter lower paid fields and take breaks from employment in unpaid carer positions. Over an approximate 40-year career, this adds up to the 47% gap we’re seeing. And, more than ever, our super needs to last us longer too, due to a higher life expectancy and the possibility that the pension won’t exist as it does now by the time we get to retirement.
Women are financially confident in many ways.
Budgeting, managing credit card debt, identifying scams and personal savings are all strong points. But we have a lot of work to do to boost our assertiveness on the investment and financial future front. It starts at a grassroots level with only 60% of women saying they understand financial language (for a laugh, take a look at our vox pop where we hit the streets with Beau Ryan to find out if people know the difference between sex terms and financial terms). Many women say they don’t have the ability to invest, and of those that are considering it the majority don’t - or don’t know how - to weigh up risk and return (a.k.a the very foundation of investing).
We need to be more like my main gurl / kween / deity Beyonce in the seminal track Independent Women Pt 1 “Pay my own fun...and I pay my own bills...Depend on no-one else to give you what you want.”
Forget a man being a plan - get your own plan!
Start by creating a savings goal and a way to get there. A simple way to cheat yourself to start saving is creating an account that is difficult to access (ie: cut up the debit card associated with it so it becomes a one-way account). A term deposit can be useful for short-to-medium term investments. For longer term investing we practice what we preach and believe superannuation is a great place to be. Not only are contributions by your employer or yourself taxed at only 15% (19.5% less than the lowest personal income bracket!!!), but with the power of compounding interest your money can work hard for you now to give you greater rewards later.
It’s useful to understand that little changes now can make a big difference thanks to the power of compound interest. For example, putting just $10 away per week in your 30s means you could be $47,000 better off when you access your super in your 60s*. $10 is nothing - a glass of wine, a couple of protein balls, or a green juice.
New segment alert!
We’re excited to announce that we’re kicking off a semi-regular series interviewing some of the ladies who inspire us around Australia. But just because they inspire us, doesn’t necessarily mean their finances or financial knowledge is inspiring. We’re getting down and dirty with their approach to money, what they’ve learnt, what they don’t know, what they wish they know. As well and tips and tricks for you along the way. Consider it your dose of #finspiration.
Know of anyone who would be great for this segment, or have any questions you’re dying to have answered? Send us an email to email@example.com.
We’d love to hear from you.
Have a read of our piece on why you should sort your superannuation out before having kids.
*based on 5% compound interest, depositing $10 per week over 35 years.