March 8 is International Women’s Day and, in my book, that’s an opportunity to focus on women’s financial wellbeing.
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A report by Monash University commissioned by AustralianSuper pulls no punches about the grim future many women could face in retirement. Entitled, The Future Face of Poverty is Female, the study confirms that women face a number of financial challenges.
It all starts from about age 28. Up to this point there’s only a small pay gap between men and women. But after this, the gender pay gap widens – and not just because women often take time out of the workforce to raise children. Women are more likely to work in part-time roles, and less likely to hold senior management positions.
A key problem facing low income earners is what the report describes as the ‘double penalty’ effect on the amount of super a woman can accumulate in her working life. A lower income means lower employer-paid super contributions (or none at all), and that means missing out on compounding returns, which are often most powerful when we start to grow super early in our working life.
Women – and men – can take important steps to grow their super without having to spend a cent extra. First, pick the super fund that’s right for you looking at fund fees in particular. Let your employer know you want their contributions paid into this fund, then take your super with you from job to job. Check if you have any lost super too. Casual workers and people who’ve held a few different jobs are most likely to have some forgotten super.
Paul Clitheroe is chairman of InvestSMART, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.