Why retirement planning is harder for women

August 2019

The average Australian woman will retire with 34% less in super than the average man. The gender pay gap, career breaks and age-related factors contribute to this disparity and make retirement planning for women tricky. While there’s no easy solution, we’ve outlined a few common issues women face and ways that you can get started on your journey to an exceptional retirement.

Gender pay gap

The gender pay gap is the difference between the average of all male and female earnings, expressed as a percentage of male earnings. It’s usually calculated on full-time weekly earnings before tax. The Government’s Workforce Gender Equality Agency estimates that Australia’s gender pay gap is currently 14.1%.

As your employer super contributions are based on a percentage of your income (e.g. 9.5%), the gender pay gap affects super too. And with women generally retiring earlier and living longer, whatever super you have in retirement really needs to go the distance. Understanding the investment options available to you and how your super is invested is an easy way to help you make the most of your super.

Add to your super ahead of or during your career break

We know women generally take more career breaks throughout their life than men—whether it’s to raise a family, take care of a parent or return to study—so it’s important to consider the impact these breaks will have on your super.

Career breaks can last months or years, and with time away from the workforce it’s likely you won’t receive super from your employer.

These missed contributions, together with years of investment returns (and compound interest), can have a significant effect on your balance at retirement.

If you’re planning a career break or are worried about the impact of a past one, the following strategies may help keep your super on track.

You may not be able to spare much, but a little can go a long way:

  • Make salary sacrifice contributions before you go on leave. You can ask your employer to put an extra part of your before-tax salary into your super.
  • Make voluntary contributions while you’re on your career break. These are after-tax contributions you make directly to your super account.

If you have a partner, you can also take advantage of the following schemes:

  • Contribution splitting allows you to split certain super contributions with your spouse. For example, if you’re on maternity leave, your spouse may be eligible to split up to 85% of their concessional (before tax) contributions, giving you more financial security for your retirement.
  • Spouse contributions enable your spouse to make non-concessional (after-tax) contributions to your account on your behalf. If you earn $40,000 or less per year, your spouse may receive a tax offset for these contributions. To receive the maximum tax offset of $540, spouse contributions of $3,000 would need to be made and your income must be less than $37,000. 

Read more about making contributions.

It’s never too late to make a difference

We want to help women tackle the challenges of financial security in retirement. Visit unisuper.com.au/women for more tools and information to help you improve your retirement outcome.