Financial inequality remains a reality for many women in Australia who earn less or who take time out of the workforce. An adviser who specialises in female clients offers her view.

As a society, we are making significant progress when it comes to addressing many of the issues around gender balance. However, financial inequality remains a concern for many women in Australia who earn less than male counterparts and who face a financial system that has not traditionally assisted part-time workers.

On top of this, the Association of Superannuation Funds of Australia (ASFA) says the average superannuation balance for a man aged between 60 and 64 in 2018 was $270,710. For a woman the same age the mean balance was $157,0492. This difference reflects not only lower incomes over a working life, but other factors such as time out of the workforce to raise children.

“Unfortunately many women are behind financially.  They have never had the right foundations,” says Joanna Ryan, Managing Director and Founder of Lumix Wealth, who specialises in offering financial advice to female business professionals and entrepreneurs.

Five common goals

A Fidelity International white paper – The Financial Power of Women – identified five common goals for female investors:

1. Fully repay mortgage
   Women over 35 want to finish paying off their mortgage.
2. Understand and contribute to super
   Many are unaware of the figure they need in their super to retire comfortably, but understand they need to contribute.
3. Save for comfortable retirement
   When it comes time to downsizing property, most older women want to use this money for retirement rather than inheritance.
4. Improve financial literacy
   Women aged over 35 tended to undersell their financial literacy whereas women under 35 are more confident in their financial knowledge and literacy.
5. Look after families and build wealth
   Women most often put family security at the top of their list of priorities but are also conscious of setting long-term investment goals.

Three key steps

These goals can be difficult to achieve for women who take time out of the workplace to raise children or look after ageing parents.

“Sadly, this is the scenario many Australian women face, which results in us lagging behind our male counterparts, earning less and amassing lower super balances,” Ryan says. “Research has shown we will live longer and most likely retire earlier than men, but to do this comfortably, we will need a bigger retirement nest egg.”

Careful planning and financial discipline are key in making up for lost time when it comes to super.

“Superannuation is a powerful investment structure which you can’t afford to ignore. In the time between investing and accessing your super savings you are able to take advantage of the magic of compounding,” Ryan says, adding that she advises clients to make small changes that can make a big difference in the future.

Ryan offers three key steps to clients looking to grow their super balance.

1. Find your lost super
   More than one super account often means a duplication of fees and charges. If you have more than one super account, think about consolidating your money into a single fund.
2. Understand your super
   Clients should know where their money is invested, understand investment time horizons and the amount of risk they are comfortable with.
3. Salary sacrifice
   Clients who can afford to salary sacrifice can set up a salary sacrificing arrangement with their employer so that some of their pre-tax earnings can go straight into super. These contributions, along with any additional salary sacrifice contributions, are known as concessional contributions.