Closing the retirement savings gap for women

In Australia today, than their male counterparts. And while some positive systemic changes are taking place, such as the government introducing superannuation contributions on the paid parental leave scheme, for many of us, these changes are coming too late. So, it is imperative that women take a proactive role in closing the gap for themselves.

In this article, we’ll explore why the gap persists and what you can do about it.

Why is there a superannuation gap for women?

The most obvious reason is that we still have a gender pay gap, resulting in lower lifetime earnings for women than their male counterparts. But there are other influences intertwined with this.

For example, women are still far more likely to take a career break than men, often to care for children or elderly relatives. In fact, 35.7% of women cite caring for children as the main reason they are unable to work or work more, compared to just 7.3% of men. And in the same vein, .

It’s often a push-pull scenario for women, too. As we are often asked to wear many hats at home and at work, managing superannuation can easily slip down the list of priorities. I particularly like the quote from author Annabel Crabb in her book, The Wife Drought, when she says, “The obligation that evolves for working mothers, in particular, is a very precise one; the feeling that one ought to work as though one did not have children, while raising one’s children as if one did not have a job.”

Perhaps in response to competing life demands, women are also much more likely to be in part-time or casual, temporary or less secure forms of work.  We saw this come to the fore during the pandemic, when women accounted for 55% of all job losses in April 2020 as restrictions hit.

In addition, women were adversely impacted by COVID super withdrawals. While more men than women withdrew funds under the government’s temporary access arrangement, women took a far greater proportion of their total balances.

While this was a difficult choice for many who needed access to the funds to live, the consequences can be far-reaching.

So how can we, as women, take proactive steps to close the super gap for ourselves?

Understand the true value of your superannuation

Understanding the true value of superannuation is a critical step in planning for a comfortable retirement. For younger people in particular, superannuation can feel like a scheme that simply deducts from your take-home wage. But it is your money and a long-term asset that can be a source of financial independence and peace of mind in retirement when nurtured early and consistently.

Yet, according to 2024  Association of Superannuation Funds of Australia research, an alarming 51% of adult Australians have not consulted any source of information in preparing for retirement.

And while a lack of knowledge about super and/or proactive management isn’t a uniquely female issue, the retirement savings gap creates a burning platform for us.

Take a proactive role in your super

If you are one of the 4 million people who still holds multiple superannuation accounts, consolidating your super is an essential first step.

If/once your super is in a single fund, set yourself goals to develop a (more) detailed understanding of it. The Australian Government’s Moneysmart site is a great place to start if you are new to learning the intricacies of it. There is also a great range of finance podcasts out there, many by women for women. Most super funds also offer free member education opportunities, so if you can, make use of them.

In fact, learn all you can. Financial literacy is critical for everyone, and that, sadly, women still lag behind men.

When it comes to your super, it’s critical to understand what your money is invested in (not just the broad industries, but the companies) and whether you have a balanced, growth or conservative investment option.  Which option is right for you will depend on your age and goals, but you can find out more about the options here.

Structure your super to weather financial storms

Structuring your superannuation to weather financial storms is essential. Periods of market volatility – such as the global financial crisis or the COVID-19 downturn – can significantly impact your super balance. Structuring your superannuation to weather financial storms is essential. Market downturns can be unsettling, but trying to time the market often does more harm than good. A more effective approach is to make regular contributions to your super, regardless of market conditions. This strategy, known as dollar-cost averaging, helps smooth out the impact of volatility and allows you to benefit from lower prices during market dips, setting you up for stronger long-term growth. You can read more about super structure here and speak to an Apt adviser to receive advice tailored to your circumstances and goals.

Make use of concessional contributions

Concessional contributions are super contributions made at a 15% tax rate, which is lower than many people’s marginal tax rate. Currently, you can make up to $30,000 worth of contributions at this rate, noting that this cap includes any contributions your employer makes for you.

The carry-forward rule allows you to make extra super contributions by using any unused cap amounts from the previous five years (noting the cap was $27,500 up to 2024). If your super balance is under $500,000 and you haven’t reached your cap, it could be a smart move to contribute more – provided your cash flow allows. The sooner you contribute, the more you can benefit from the power of compounding over time.

Of course, super isn’t the only way to grow your funds. You can also invest funds in your own name; however, your super fund is often a more tax-friendly environment – as long as you don’t need access to the funds before retirement age.

Leverage super splitting or spousal contributions

Another way to close the retirement savings gap is by leveraging spousal contributions and super splitting. These strategies allow couples to rebalance their retirement savings, particularly when one partner has taken time out of the workforce or works part-time. Spousal contributions involve one partner making contributions to the other's super fund. If the receiving spouse earns less than $40,000 a year, the contributing partner may also be eligible for a tax offset.

Meanwhile, super splitting allows you to transfer up to 85% of your concessional (before-tax) contributions to your spouse's super fund, providing greater flexibility in managing retirement balances and maximising tax efficiency as a household.

These strategies can be important, particularly for those taking on more unpaid care responsibilities, to build their long-term financial security. Of course, before implementing either approach, it's wise to speak to a financial adviser to ensure it's the right fit for your circumstances and long-term goals.

On the topic of spouses and super, it should also be an important consideration if your relationship breaks down.

Consider the importance of super in divorce proceedings

While the family home can often be seen as the most important marital asset, particularly when children are involved, opting to retain the house over a share of superannuation may not put you in the best financial position in the longer term.

Considering the value of superannuation as part of any asset settlement is essential, as overlooking it can widen the retirement savings gap and see you face financial challenges in retirement.

Divorce is an emotional time, and it can be hard to make long-term decisions when emotions are high. Having an experienced financial adviser and a legal team working together in your corner before you settle is a great way to ensure you make informed decisions that protect your family’s long-term wellbeing.

Closing the retirement savings gap for women isn’t just a matter of policy – it’s a personal financial imperative

While systemic change is slowly taking shape, many of the most effective tools for improving retirement outcomes are already within reach. From consolidating your accounts and understanding your investment options to making additional contributions or leveraging spousal strategies, there are tangible actions you can take now to improve your financial future.

The earlier you begin, the more time your super has to grow, and the better positioned you’ll be to retire with confidence and independence.

Seeking advice to navigate your retirement savings and make the most of your super? Contact the Apt Wealth team  to book your free consultation.

General advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommend that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.