More Australian women are retiring into poverty than ever before. On average, we retire with somewhere between 22 and 35 per cent less super than men, and then live an average of around four years longer. More life, less money. It’s the effect of a gap that starts small and expands unevenly as the system effectively penalises choices many women make: time away from the workforce to raise children, part time work and second careers begun later in life.
We’re a month into Payday Super legislation coming into effect across Australia, meaning your employer now pays your super at the same time as your wage rather than quarterly. Your money is paid earlier, so it’s invested sooner, and unpaid super becomes much easier to see. It’s good policy that will help people grow their balances faster. But we need to do a lot more to help prevent the transition into an under-funded retirement that many women are facing.
According to REI Super data, the average difference between men’s and women’s balances is about $4,000 in your 20s. By retirement, that gap grows to around $67,000 – accumulated over a career while we’re busy working, paying mortgages and raising families.
On average, men retire with roughly $192,000 and women around $125,000, and yet the Association of Superannuation Funds Australia (ASFA) suggests around $630,000 is needed for a comfortable retirement. Clearly, there’s work to do.
I consider myself fortunate because I was forced to look at my superannuation in time to do something about it. But I often think about how much further ahead I’d be if someone had sat me down in my 20s and told me the facts about how the system works.
When I was 25, superannuation was the last thing on my mind. I was building a career, thinking about the next promotion, the next deal, everything in front of me. Retirement was a distant concept I’d worry about later. Like a lot of women, I told myself I’d focus on the long-term stuff once life settled down.
Of course, life doesn’t usually settle, it just keeps life-ing.
When I took time out of the workforce to become a mother, I had very little super behind me. Years later, I was navigating a separation and had to divide a self-managed super fund that I’d entered into without properly understanding what it would mean if my circumstances changed. That was the moment super stopped being an abstraction for me, because I was faced with very real numbers that needed to grow, a lot.
My super went from an ordinary fund that was set up with my first job into an SMSF which dissolved through my separation, and I’ve since rebuilt with the benefit of education and quality financial advice. I hope that by sharing my story, I can help expand the conversation so that more women build a better future for themselves while their leverage is strongest.
I recently hosted a three-part podcast series called Future-Proof: Women’s Financial Wellbeing in Real Estate, to shine light on real women’s stories and practical, expert advice. One of my guests, Khyati Halani from REI Super, said the $4,000 to $67,000 average gap isn’t the result of one big mistake, it’s small differences that compound over time: “It’s a result of ignoring small things and leaving everything on autopilot.”
Leaving things on autopilot is part of the reason we’re behind with super. Here’s what else I took from our conversation, and what I’d tell my 25-year-old self (not financial advice!):
- Addressing your super doesn’t require much more than 15-30 minutes once a year. Find your super (many of us have more than one account, and the ATO says there’s around $18.9 billion in lost Australian super!), stay on top of it, and know your numbers. Set an annual date to check on your superannuation and take action, however small.
- Look at how your super is invested, and seek advice based on your goals and career stage. Many of us still have our funds sitting in whichever default investment was allocated when the account was opened.
- Review your insurance, and check who your beneficiaries are. Super doesn’t automatically go to your family; it goes to whoever you last nominated on the account. One of my guests discovered entirely by chance that her entire balance was still nominated to an ex-husband, long after divorce and remarriage.
- If you’re a consultant, commission-based worker or business owner, you may have fallen into the trap of not paying yourself any super at all. Treat yourself like an employee when it comes to super, because no amount of payment-timing reform can help if there is simply not enough capital flowing in.
The more we can talk openly and normalise the superannuation conversation, the more women will take action to help close the gap. I can’t go back, but I’m committed to elevating the superannuation conversation so that more women can access the information and prompts for action that I wish I’d had.
Sadhana Smiles is the CEO of Real Estate Industry Partners (REIP). REIP’s “Future-Proof” three-part podcast series, produced in partnership with REI Super, can be found on REIP’s “Beyond the Numbers” podcast. Episode 1 can be listened to here.
This article contains general information only and is not financial advice; seek advice appropriate to your own circumstances.