Paul's Insights: Bridging the Gap in Women's Superannuation

Developing financial literacy among women is a key priority.


Summary: Paul Clitheroe, Chairman of InvestSMART and the Australian Government Financial Literacy Board, and the Chair of Financial Literacy at Macquarie University, writes about educating your children about finance and superannuation from an early age.

Key take-out: Engage with children about money matters from early on. It is then a natural progression to fine-tune those discussions into areas like super when the time is right.


When you think about retirement, chances are you see yourself kicking back over long lunches, lazy days on the golf course and maybe travelling the world – job-free and carefree.

But if you’re a woman, think again.

It’s no secret that women retire with far less in super than men. Women aged 60-64 have average super savings of $138,154 – less than half the $292,510 average balance for men the same age. One in three women retire with no super at all.

The gender super gap starts at an early age. Women in their early 30s for example, have an average of $25,549 in super, compared to $36,373 among 30-something males, and the gap continues to widen through to retirement.

Women face a raft of challenges

Some basic facts contribute to low levels of superannuation for women: lower average incomes, broken work patterns (usually for family reasons), lower participation rates with super, and in the end, less superannuation. These are all big issues for women and their families, but there’s something else at work.

Research by the Financial Literacy Foundation found women tend to be less confident in their ability to manage money, less comfortable with their financial situation, and when it comes to investing, planning for the future and retirement – all the things that allow us to take control of our money in the longer term – women lack confidence.

It makes developing financial literacy among women a key priority. And like all good habits, sensible money management is best developed from a young age.

Aussie teens rate well for financial literacy … mostly

Our schools are making a big contribution to financial literacy among both boys and girls, backed by a wealth of resources developed by the Australian Securities and Investments Commission. Testing by the Organisation for Economic Co-operation and Development (OECD) shows Aussie teens rank fifth in the world for financial literacy. However, the same tests found one in five of our 15-year-olds don’t meet the OECD’s baseline for proficiency with money matters.

That’s got to be a wake-up call for parents to help their children – boys and girls, develop money skills.

It’s never too early to start

It’s never too early to weave simple lessons about money management into family life. I came across some great research by Cambridge University showing children’s basic attitudes to money are formed by age seven. It turns out that much of what kids learn about money comes from watching and listening to mum and dad.

That makes talking about money with your kids one of the simplest yet most effective steps parents can take to develop our youngsters’ financial literacy.

I’m not referring to those “You spent how much on those jeans?!” type of discussions. Rather, it’s about relaxed conversations on things like comparing prices to find value, different ways to use birthday money (spending versus saving), recognising needs versus wants, and maybe sharing a few of your own experiences with money.

Avoid the gender bias trap

The OECD found 84 per cent of Australian families do talk about money with their children. However, research from the US shows parents can bring an unintended “gender bias” to money talk. One study found parents are more likely to speak with boys than girls about setting financial goals, or to praise their son rather than their daughter for being good with money.

It may sound like a no-brainer, but it’s worth stressing. If we’re going to give our daughters the financial skills to achieve important goals like growing a decent pool of superannuation savings, we need to instil a sense of confidence that they are every bit as capable as boys when it comes to building wealth.

Simple steps can make a big difference

Opening a bank account for your daughter can be an important starting point. It gives a child a sense of ownership and control of their money and helps to encourage basic budgeting. And, of course, it’s a vehicle to grow savings and learn first hand about the power of compounding. This alone can encourage girls to take an interest in their super later on.

When your daughter is old enough to enter the workforce, even if it’s a part-time job, help her select a superannuation fund. More than 50 per cent of women have more than one super account, and along with wasting money on fund fees, having multiple accounts makes it harder to keep track of super.

Guiding your daughter through the process of selecting a fund can also be a powerful lesson in the basics of investing – comparing fund fees; looking at where the money is invested (an opportunity to explain the benefits of growth assets over the long term); and whether the fund has a reasonable track record of returns and a history of sensible management.

Back this up by asking your daughter about her super from time to time. Has she checked her fund statement? Is there anything she is unsure about? And maybe mention you’re glad you took an interest in your own super because you won’t need to rely on your kids for financial support in retirement (then sit back and enjoy the look of relief on your daughter’s face).

Keep it relevant

I realise that for 20-somethings, superannuation can hold very little relevance to their daily life. When you’re 20, 40 can seem ancient, and retirement …well, that’s so far off you may as well be talking about the day that people colonise Mars. But if you can engage your children in conversations about money from an early age, it’s a natural progression to fine-tune those discussions into areas like super when the time is right.

We all want the best for our kids, and undoubtedly a stable upbringing, a quality education, and a tonne of love and encouragement are the things that really matter. That said, if we can help our children develop a sensible approach to money matters they will be on track to enjoy financial security. In particular, if we can give our daughters the skills and confidence to manage their money wisely and plan for their own future, chances are they’ll enjoy a better outlook in their senior years than many women approaching retirement today.

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