Inequality helping stack cards against women in retirement

Women are being urged to save now to stave off a dramatic drop in their standard of living in later years, writes David Potts.

Women are being urged to save now to stave off a dramatic drop in their standard of living in later years, writes David Potts.

Women earn an average of 17 per cent less than men but an even bigger disadvantage is not getting any super paid in for them when they're out of the workforce to have children.

Men have 63 per cent of the nation's $1 trillion in super, according to industry fund First State Super which runs the website womenandsuper.com.au. It quotes ACTU and federal government studies that estimate the financial disadvantage women have over a lifetime is the equivalent of about $1 million.

Although Australia's super system is complicated, rule-bound and often illogical, women are more likely than men to feel "inadequate, ashamed or dumb", reveals a survey by the Association of Superannuation Funds of Australia (ASFA) and Suncorp last year.

While it does nothing for the gender gap, the plans to increase the levy paid by bosses into your super, which is rising from 9.25 per cent (as of Monday) to 12 per cent, will be a modest help.

The government's paid parental scheme, which pays primary carers 18 weeks at the minimum age, does not include super.

But the Coalition's paid maternity scheme which would give women six months of full pay after a baby does include it.

The financial cards are stacked against women because they live longer, and so need a bigger nest egg at retirement, there is the 17 per cent average gulf between male and female pay packets and there is a hit to their super from years of reduced or halted earnings as a result of caring for children and later older parents.

A 20-year-old woman today could expect to live to the age of 94. Her retirement will be almost as long as her time in the workforce.

The period out of the workforce is a double whammy. There's no super contribution and no impact from compounding. The balance of a super fund earning 10 per cent a year would double in seven years.

In the year to June 30 the average super fund balance grew 12 per cent, according to Chant West .

Based on the ASFA benchmark of a "comfortable retirement", which includes owning a home - on an income of $40,391 a year, Rice Warner Actuaries calculates that with regular promotions and salary increases a typical woman would be $186,500 short of the balance needed.

Take out a five-year career break - a year off for the first child, then part-time work for two years, another year off for the second child and another year of part-time work - and she will be $232,500 short.

A big dive in income in later years because of age discrimination will also be a blow to women now in their 20s and 30s, who are accustomed to a higher standard of living.

But for many women in their late 40s, 50s and 60s, who were struggling to house themselves, "this is already happening, it's started, and it's going to increase", Brotherhood of St Laurence researcher Helen Kimberley said.

Women with no partner, little or no superannuation and who have had extended time out of the workforce to care for children or parents are particularly vulnerable to poverty, because many struggle to return to work. This includes women who would consider themselves qualified and "middle class".