While our radios are buzzing with election promises from both sides of politics, there are those in our community who have been forgotten in the fevered debates on tax reform, healthcare and immigration. I’m talking about the growing number of women in their 50s and 60s – still years off the pension age – who are facing life on the streets due to extreme financial difficulty.
Family breakdown, loss of a spouse, spiralling living costs, and lack of financial education are some of the causes, but it’s compounded by the rise in casual work and the inequities of a traditional super system that is stacked against women from the start.
Promises of childcare fee reductions, better parental leave packages and tax cuts are great, but we need meaningful changes to the superannuation system to ensure it becomes more inclusive.
Gender inequity not on the election platform
This isn’t something that features heavily enough on politicians’ minds – or on the agenda of most Australians. A recent Ipsos survey of the top 10 issues worrying Australians in the lead-up to the polls includes health, cost of living, and crime in the first three spots. Poverty/inequality came in way down the list at number nine.
According to a 2018 report, Retiring into Poverty from the National Older Women’s Housing and Homelessness Worker’s Group, the number of older women experiencing homelessness has skyrocketed, up by 31 per cent from 2011 figures. Charities are seeing more women in early middle-age left destitute by economic circumstances. Many of them have worked at various times over their lives yet they have little to show for it and for the first time they now find themselves homeless.
If you’re a woman, life on the streets these days is a lot closer than you think.
Although most of us believe this could never happen to anyone we know, the fact is it could. Women are particularly vulnerable to the financial shocks and unexpected events that happen later in life – especially if they have taken time out as an unpaid carer. Looking after children and concentrating on keeping everything on-track at home comes at a cost, and it hits when you can least afford it.
Crisis formula: Gender pay gap, irregular work life and living till you’re 90
If you are a woman aged over 40, I suggest you look up your super balance. Chances are it will be a lot lower than your male partner or the man working in the cubicle next to you, even if you work full-time. In fact, on average, most women at retirement have less than half the amount of superannuation of men. For women working in the gig economy as freelancers or running micro businesses, the situation may be even worse. Many small business operators don’t put any money aside as it’s not a legal requirement. As a result, as many as one in three women have no super at all.
And if you rely on your employer for mandated super contributions, it’s not much better. The Workplace Gender Equity Agency estimates the average pay gap still sits at around 14.1 per cent for full-time employees, a difference of $239.80 per week.
Lower pay and living longer means women are constantly behind the eight-ball when it comes to saving for retirement. Add to that the fact that women don’t usually work in a linear way (they often take time out when they have a child, they may work part-time or take casual jobs, or stop seeking higher paid jobs) and you can see how retirement becomes a risky business.
Increasing employer super contributions to 12 per cent won’t improve that either. The reality is any requirements for higher super contributions by the employer will most likely be covered by lower wages.
Better education and expert advisory needed at crisis points
Divorce is also a dangerous junction. Marriage breakdowns are increasingly occurring later in life which compound problems for women who may not have worked continuously.
Finding employment as you get older is much harder: there’s less chance of re-entering the workforce to add more to your nest-egg. According to a 2016 study by AMP-NATSEM, divorced women with children had 37 per cent less super than divorced dads from similar age groups and socio-economic backgrounds, and 68 per cent less super than married mums.
Governments should be doing a lot more to address these problems. Part of that includes better education programs and access to professional advisory services for women to plan their financial futures – especially at crisis points. Schools should also include basic financial literacy programs in their upper school curriculums to help women, in particular, to embrace financial independence early in life.
Financial advisers also need to think more broadly about their clients. In the past, wealth management concentrated on men because they controlled the finances. Now there’s a real shift because more women are working, some are the main breadwinner, and an increasing number will inherit wealth from their baby boomer parents. Advisory services must become more inclusive and appeal to women at key life stages, across all income brackets.
Don’t stop voluntary contribution schemes
Importantly, we need to continue to provide incentives for women to put extra money toward their own retirement. The proposed carry forward unused contribution deductions (starting on July 1) for those that have not reached their pre-tax contributions cap should remain, as should the deductibility of one-off lump sum super contributions for all, not just the self-employed.
Participation rates for these schemes could be improved with a better understanding of how super works and what’s at stake. Traditionally women are not encouraged to discuss money, wealth creation, or investing. If they were, things could be different.
A study by Women in Super (2014) into voluntary contributions found while nine in 10 women actively checked their superannuation account balances each year, only four in 10 know what investment options they were invested in. A 2015 ANZ Survey of Adult Financial Literacy also found women were more likely than men to find dealing with money stressful, and from the age of 28 were less financially knowledgeable and less well-informed than men.
Even a simple change in how super is invested can make a big difference in the long run. Why don’t we see some public education campaigns about this?
Stop listening to fairy tales: women need to lead the way
Telling young women to forget the knights in shining armour might break a few dreams, but real life isn’t a Hollywood movie. It’s not a sensible game plan to wait for a rich husband. We need to boost the financial literacy rates in girls and to teach them to have confidence in managing their own financial life.
It’s not crass or ‘penny-pinching’ to discuss money. It’s clever. Women need to lead the discussion more in columns, on blog sites, in social media and in public commentary. It needs to become the norm to see women in the media discussing and advising on investment options or tax advice.
Part of our overall wellbeing means paying better attention to our own financial health. With targeted education, more gender-equitable policies to address the structural problems within the super system, and catch-up incentives we might be able to reduce the number of women falling through the cracks.
Let’s hope the politicians remember that once the election is over.
Tania Tonkin is a director at dmca advisory, as well as a financial adviser and chartered accountant with an interest in financial literacy. She also offers regular financial management workshops for women and tailored private coaching programs for women affected by adverse life events.