Shortchanged: how our ‘not-so super’ system is failing older women
Many Australian women, who have spent their whole lives caring for others, are retiring in poverty in droves. And, numbers are on the rise
One in three women in Australia retire with no super. Let that sink in. Does that make you angry, lady? Don’t worry - us too - and we voiced that anger in a recent memo to the Morrison Government. But we digress...
While there is clear focus and much-needed attention given to issues like the gender pay gap, the ‘super gap’ is just as prevalent and damaging to the financial futures of women. And, in many ways, the two go hand in hand.
There are a number of reasons why women over 55 are the fastest growing population experiencing homelessness in Australia, and superannuation balances, or lack thereof, is one of the driving factors.
So, why isn’t our super system working for women? What is the link between the gender pay gap and the super gap? And what practical actions are needed to redress these systemic inequities?
This is gonna be a big conversation, so strap yourselves in. And, because of course, most of the women behind Ladies Talk Money are in their 20s and 30s, we made sure to include the voices of older women too.
A big thanks to feminist researcher and academic and all-round women’s rights badass Dr Debra Parkinson, co-author of Living Longer on Less, and to Sophia Alexandra and Gaenor Meakes for lending their voices to this piece, as well as the fearless women at Older Women’s Network (OWN) for their advocacy in promoting the rights, dignity and wellbeing of older women.
Ok lady, let’s dive in.
Why our ‘not-so super’ system doesn’t work for women
To better understand why so many older women are facing economic insecurity, we need to look at the structures that have created this inequity in the first place (just one of them being super).
Let’s go back to where super began. Superannuation policy was first introduced in 1991 with the Superannuation Guarantee (SG). It set out a framework that required employers to make contributions into a super account on behalf of its employees.
And the ‘guarantee’ bit? That’s the minimum amount your employer needs to contribute on your behalf, which is calculated based on how much you earn (currently, 9.5% of your income before tax).
It was introduced to reduce our reliance on the Age Pension by giving us an extra bank of forced savings to fund our retirement. While it sounds helpful in theory, unsurprisingly, the super system was designed with a very particular kind of employee in mind…
Hint: not women.
Indeed, the modelling used by policymakers to calculate how much employers needed to contribute was based on what was deemed a ‘normal taxpayer’, which translated to someone who remains in full-time employment (uninterrupted) for over 35 years. Guess who that sounds like - not us, right?
If you did manage to fit this (very narrow) definition of an ‘employee’, it was estimated that you’d build up enough in your super fund to support yourself later in life.
But the reality is that most women (heck, most people) don’t follow this pattern of work, nor is what we’re retiring with anywhere near enough to keep us living a comfortable life beyond the age of 65.
As feminist academics Catherine Weiss, Dr Debra Parkinson and Alyssa Duncan explain in their paper Living Longer on Less: Women, Paid Work, and Superannuation in Victoria, Australia: “even when contributing 15% of her salary to superannuation, a woman working full-time for 40 years at average female wage levels is likely to outlive her superannuation.”
As you’re well aware, this is because women continue to earn 13.4% less on average than men in Australia (i.e. the pay gap). And - here’s the kicker - because the amount of super our employers pay is directly related to how much we earn (if we earn a formal wage at all) - that initial gap grows out to a whopping 35% by retirement age thanks to a little thing called compound interest.
But it’s not just the gender pay gap that reveals why super isn’t working for women. Here are five other factors at play (and yes, there are more):
Our patriarchal society and heteronormative family structures mean that the work of men continues to take priority over women. That means men are still seen as the ‘breadwinner’, while women’s work continues to be dismissed and devalued.
These gender norms continue to assume that women will play the primary caring role. 72% of all unpaid work in Australia is completed by women and this unpaid work is not only never done but it impacts our capacity to participate in paid employment, and further reduces our ability to grow our super balance.Feminised and women-dominated industries (such as healthcare, social work and education - you know, the things that are required to keep the world going around) tend to attract lower wages.
Women are overrepresented in casual employment or working a number of jobs simultaneously, with 67.2% part-time workers women. In many cases, this means our employers are paying less into our super (or not contributing on our behalf at all).
Women who experience domestic or family violence and financial abuse also come up against a unique set of financial challenges, as a lack of financial independence can stop women from having the ability to leave.
For older women living in Australia today, the concept of super is something that only came along part-way through their working life. Many older women were already working and established in their careers long before the introduction of super, with many operating under the assumption that the Age Pension would be enough to live on.
There are also distinct and higher barriers to financial security for women who are also queer, migrants or refugees, First Nations women, or people with disabilities, as discriminatory hiring practises, injustice and intergenerational poverty further entrench financial insecurity.
One of our faves, Verve Super, recently published an interview with two fierce Aboriginal women, Ella Noah Bancroft and Kirilly Dawn, who spoke to the importance of financial literacy in Indigenous communities. Read more here →
The experience for older women in Australia
We know that women experience higher levels of income insecurity in almost every stage of life, but especially as they get older. So, what does all this amount to for older women?
We spoke with Sophia Alexandra (spokeswoman for the “Living Longer On Less” research), who highlighted some of the specific challenges that older women in Australia are facing right now, including:
Access to affordable, safe housing:
Many older women are forced to compete for properties in an ultra competitive market and limited supply means they don’t have a choice in the size, location or condition of the property they live in.
“My last rental property was more than an hour away from work, family and friends. It was way too big for me, but after exhausting my options closer to my work and being unsuccessful with two applications, I accepted this one. It’s too big for me to manage, so I need to pay someone to help mow the lawns, it is worn out, and old and smelly. Repairs were ignored and I felt at the mercy of the agent. It was unbearable.”
Cost of health and child care:
Private health insurance is a “luxury” many older women aren’t able to afford, meaning they are left to wait for extended periods of time to receive care in the public system. And, even though many of them do it because they love their grandchildren, grandparents - especially women - are providing 20 hours or more of childcare a week because of the exorbitant costs of childcare in this country. (To add your voice to the Make It Free movement, visit: makeitfree.co)
“I have a chronic health condition, I was a single Mum - to pay for childcare [contributed to my economic insecurity] and as my health conditions have worsened, I am spending more money on medical care.”
Cost of living:
Over the past decade, the cost of basic goods and services (such as gas, electricity, groceries and more) has increased by 23.4%, putting added financial strain on older women.
“We gave our life to our family, children, grandchildren, work, community. We keep giving until there is nothing to give. Have some f*cking respect and listen to what we need for a change! Give us our dignity back. Make it possible for us to live in dignity and reverence.”
Social isolation:
Having good physical health, mental health and social connectedness are all linked to a healthy ageing process but there are over 51% of women who report feeling lonely for at least one day a week.
“During the pandemic social isolation increased. I fear for the future, my mental health is at risk, I have insomnia at times, and a complete loss of confidence, guilt and shame for where I find myself.”
Financial insecurity:
60% of women aged 65-69 have no superannuation at all. That’s outrageous. According to OWN, many older women have been forced to either stay at work for longer or go back to work to support themselves. Not just that but many women have taken time off work for prolonged periods for caring responsibilities, and struggle to find a job that matches their skills, experience and availability.
“The generation I came from, we were not encouraged to do higher learning. With no qualifications to begin with, that equals lower pay. Stopping work to look after my ageing parents. Superannuation contributions came too late and too low. Temp work, returning to study to secure a career, financial abuse in my marriage, divorce. becoming a single Mum. These factors are still present for many women.”
Plus there are generational differences in social norms that have caused significant financial disadvantage for older women today. “Marriage and family held the highest value, as did looking after your extended family, which means many interruptions to earning an income,” explains Sophia.
While it's clear women have (and continue to) face a unique set of challenges later in life, the pandemic has only intensified these experiences of disadvantage. If we know one thing for sure: it’s that this reality and our system should prompt feelings of guilt and shame, but those feelings do not belong to women.
Research Fellow at Monash University and co-author of “Living Longer on Less”, Dr Debra Parkinson, echoed what Sophia spoke about and shed further light on the compounding impacts of the pandemic on women’s economic outlook later in life. (Yep, good ol’ corona strikes again.)
“Disasters, like extreme weather events or bushfires or pandemics, exacerbate the everyday discrimination against women. In our disaster research, we concluded that when the stakes are high, it is men’s interests that will be privileged.”
Bridging the super gap for women
We know this all seems incredibly doom and gloom, but it doesn’t have to be the case.
Right now, we’re seeing the power of collective action and conversation (such as the advocacy work of the likes of Grace Tame) in calling out system inequality and shattering the shame, guilt and stigma that have kept women silent for too long.
The reality is that individual action alone isn’t going to be enough to solve the problem of economic disadvantage for older women in Australia. At a policy and government level, system change is needed to dismantle and rebuild the systems (such as super), which are keeping women in positions of financial inequality.
Key steps such as lowering the pension age, increasing the rate of the Age Pension (to keep in-line with the current cost of living), and creating affordable housing communities for women as practical action policy-makers can take to make a meaningful difference.
“Older women have to jump through so many hoops and have to work so hard just to be heard and respected, let alone supported. It is time the community, and the country, gave back! We need to look at other models of reverence and respect for older women around the world. Every single country and community around the world, was built by the values and hard work of women over many generations.” - Sophia Alexandra
We couldn’t agree more. There are so many clear opportunities for change at a structural level.
And, at the same time, we also believe there is a huge amount of value in taking any steps we can to improve the financial future of ourselves (and the women around us) through the power of talking about money.
Coming up, we'll be releasing our guide to ‘Mastering Money in Your 50s’ (following our super popular Mastering Money in Your 20s and 30’s, and 40’s)- featuring plenty of practical actions we can take to improve our long-term financial horizons, no matter how old we are. If you want to be the first to know when it’s live, sign up to our mailing list at the bottom of our website. ↓
There’s no getting around the fact that super and retirement are concepts created by men, to preference the interests of men. Meaningful systemic change is absolutely necessary (and well overdue). However, we quite literally cannot afford to wait for that change to happen before we ourselves try to improve our financial futures.
Each of us has power and agency, which might not feel like much in the face of deep, structural disadvantage, but we have to start somewhere.
If you are still in the rage stage - we get that, and we support that, you might even like to write your own Memo to the Morrison Government! But if you are ready to take action - we want to hear what actions you are taking to help secure your financial future and that of the women around you (those that look like you, and those that don’t).