Wednesday 8 March 2017 marks the 100th anniversary of the first International Women’s Day. Since then, there have been enormous gains in terms of gender equality – but when it comes to our financial equality, women still have a long way to go.
The situation is improving, as female financial literacy rates increase around the world and more women become empowered to take control of their money. But women still face a variety of unique challenges throughout their lives that can become barriers to growing their wealth.
Here are some of the key financial gender gaps – and how we as women can overcome them.
Despite making significant headway over the last century, the gap between women’s and men’s salaries remains one of the most visible signs of gender inequality.
On a global scale, women earn about half of what men earn – with women bringing home an average of $10,778 compared to $19,873 for men. Even though things are slightly better in Australia, women working here full time earn 23.1% less than men – creating an average wage gap between the sexes of $26,853.
On the other hand, if we were able to close the Australian wage gap once and for all, women would see a significant difference to their overall financial position and would be better able to plan a secure future.
Women are less engaged in the workforce than men, largely because we tend to take career breaks while we raise children. And as our population ages, women are more likely to take on the role of caregiver for their elderly parents as well. Squeezed between these responsibilities, we have less time over our working lives to earn money and build up our savings.
What’s more, many women who return to the workforce after a career break end up working part time. In Australia for example, only 28% of women with dependent children work full-time, compared to 82% of men with dependent children.
The combined effects of lower wages and workforce participation contribute directly to a substantial superannuation gap between women and men. Because women can earn less over the course of our working lives, we also receive less in compulsory Super Guarantee payments from our employers. And while we take time out of the workforce, we’re often receiving minimal super payments or none at all.
The end result is that women are likely to have much lower super balances when we retire than our male counterparts. In fact, the current average super balance for men aged 60–64 is $292,500 while women in the same age bracket only have an average of $138,150 (less than half). This means many women will retire without enough super to fund a comfortable lifestyle, and they may even run the risk of outliving their savings.
Three ways to close the gap
The good news is that society is already moving towards closing these gaps. And in the meantime, there are steps us women can take while we’re still working to improve our personal financial situation. Even if you’re in the final stages of your working life, there are ways to make your income work harder for you so you can shape your financial future.
1. Start boosting your super
Your super is probably the most valuable tool you have for growing your nest egg, so it pays to make the most of it.
First, consolidating your super into a single account may help you avoid paying extra money in unnecessary fees. However it is not appropriate for everyone so before you make any changes to your super, talk to your financial adviser. You may also need to consider things like exit fees, the loss of insurance cover and the cost of withdrawing from your current super fund. Then, consider asking us about whether setting up a salary sacrifice strategy is right for you. You can talk to you employer about setting up a salary sacrifice arrangement – this means they take a fixed amount out of your pre-tax earnings each payday and put it into your super account for you.
As with your employer’s compulsory contributions, your salary sacrifice contributions are generally taxed at just 15% when received by your super fund. If you’re over 50 (anytime during this financial year) you can make up to $35,000 in pre-tax super contributions before extra tax applies (or up to $30,000 if you’re under 50). But from 1 July, this cap will be reduced to $25,000 per financial year – so it may be worthwhile talking about whether you should be taking advantage of the current cap while you can.
2. Put away a bit extra
As well as salary sacrificing, you can give your super a boost each year by making an after-tax contribution. This is an excellent way to grow your nest egg if you come into some extra money – for example, if you earn a bonus, receive an inheritance or end up with some surplus cash after downsizing your home.
You can currently make up to $180,000 in after-tax or ‘non-concessional’ contributions to super each year before extra tax applies. If you’re under age 65 during a financial year, you can even put in three years’ worth of contributions at any time during those three years, which means you can contribute up to $540,000 in one go. But from 1 July, the cap will be reduced to $100,000 a year (or $300,000 over three years), so if you have the means to make the most of the current cap, now may be the time.
3. Speak to me - Bronwyn Tyrell - Financial Stylist at Vivid Advisers
I can help you work out the right strategies for making the most of your income and savings. For women especially, it’s important to get professional guidance at each stage of life. So no matter where you’re at, I can help you understand your options and empower you with the knowledge and skills you need to make confident financial decisions.
 World Economic Forum, The global gender gap report, 2016.
 Workplace Gender Equality Agency, Gender Equality Scorecard, November 2016.
 Australian Bureau of Statistics, Education and work, Australia, 6227.0, May 2016.
 ASFA, Superannuation account balances by age and gender, Dec 2015. Based on 2013/14.
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