Older women face poverty in retirement without urgent action: new report

Without bold action, Australia faces a looming crisis of older women entering retirement in poverty, driven by gender gaps in super caused by major life events that worsen women’s economic insecurity.

A landmark new report for the Super Members Council by Impact Economics and Policy finds single women and renters are amongst the older women most at risk of retirement poverty.

Women today retire with 25% less super than men. The median super balance of women aged 60–64 is $51,000 lower than for men, and women are around ten per cent more likely to have no super at all.

Historically, the gender super gap was seen to have been driven largely by inequalities in women’s workforce participation and pay, particularly when caring for children earlier in life.

But in a compelling new insight, the report finds many common later-in-life events such as separation, unpaid caregiving for older relatives, and family violence are significantly more likely to force women into early retirement or part-time work. Those life events dramatically erode women’s ability to save for retirement, and could mean up to $95,000 less in super.

Rising numbers of single older women are now also renting, with nearly 60% of older female renters already living below the poverty line.

But the report shows policies allowing women to withdraw super early for house deposits would make women significantly poorer in retirement, with less income to live on. Previous research shows it would also worsen housing affordability.

Reforms over the past 15 years such as Paid Parental Leave should mean fewer women need to take large career breaks, and more workforce flexibility can avert the risk of being forced to retire early by life events.

However, despite some progress, men’s super will continue to outpace women’s as life events and a lack of targeted policy interventions continue to prevent greater female workforce participation.

The report, released today, highlights how the Australian Government could make further strides to close the gender super gap with the right policy settings, including:

— Unfreezing the Low-Income Super Tax Offset (LISTO), to help low-income women to build their super.
— Close gendered loopholes in super coverage including through payday super reforms, and by paying super for all workers including nannies, housekeepers and carers, and for all workers aged under 18.
— Remove barriers to women’s workforce participation by boosting access to childcare and aged care and strengthen workplace flexibility.
— Enabling fairer splitting of super in divorce settlements whether or not they are handled in a court.
— Boost Commonwealth Rent Assistance to give immediate help, and invest in new social housing over the medium-term, to protect vulnerable older women who are renting or at risk of homelessness.
— Make the super and age pension systems simpler and easier to navigate.

Super Members Council CEO Misha Schubert says the report was a wakeup call for all policymakers, with compelling new insights about the lived experiences of older women in retirement.

“Australia has made important strides in recent years on the gaps in pay, super and workforce
participation, but this research shines a spotlight on the need for further bold reforms to ensure our retirement system truly works for women – especially low-income women,” Ms Schubert said.

“Without urgent action, generations of Australia’s lowest-paid women risk poverty in retirement.

“Recent reforms are an important start, but an even bigger and bolder approach is needed.”