Women earn less, which leads to less savings in retirement. Worldwide, women only make 77 cents for every dollar earned by men which equates to women getting paid 23 per cent less than men as stated by UN Women.
The gender pay gap exists due to inequality in the average wages between men and women that exist in all countries not just Australia and across all sectors. Even though much of the work women complete is equal or more effort and skills, it’s valued and remunerated less.
Many organisations world-wide and here in Australia such as UN Women – Platform of Champions and Women in Super are taking action to close the gender pay gap. The Australian Labor government are pushing to help close the gender pay gap and increase pay for women workers – particularly in caring jobs. They plan to take action by; strengthening the ability and capacity of the Fair Work Commission to order pay increases for workers in low paid, female dominated industries; Legislating so large companies will have to report their gender pay gap publicly; Prohibiting pay secrecy clauses and giving employees the right to disclose their pay, if they want to and Taking action to address the gender pay gap in the Australian Public Service.
We hope for the day policies are improved for women, but we cannot wait for policy changes, women must act now to make gain control on their financial health.
Closing the gender gap is not just about super alone but investing in a financial plan is an outstanding way to help you bridge the salary and super gap and build your wealth – no matter what stage of life you find yourself.
The gender gap
The gender pay gap is the difference between women’s and men’s average weekly full-time equivalent earnings, expressed as a percentage of men’s earnings. It is a measure of women’s overall position in the paid workforce and does not compare like roles. At present, Australia’s gender pay gap is 13.8% calculated by WGEA. This equals out to an average of women earning $255.30 less than men.
The gender pay gap is prompted by several factors, including:
- Discrimination and bias in hiring and pay decisions
- Women and men working in different industries and different jobs, with female-dominated industries and jobs attracting lower wages
- Women’s disproportionate share of unpaid caring and domestic work
- Lack of workplace flexibility to accommodate caring and other responsibilities, especially in senior roles
- Women’s greater time out of the workforce impacting career progression and opportunities.
The chart below depicts the Australian gender pay gap (May 2011-November 2021)
How to close the gap
There are a several ways women can close the gap and gain control of there financial wealth, so that when retirement comes women can breathe a lot easier.
Close the gap with targeted financial plan
Having a financial adviser draw up a financial plan on several non-gender specific financial issues such as setting up a budget, paying off debt, putting away savings, investing, superannuation, retirement planning and much more. A knowledgeable financial adviser can address the issues that women face – for example low-income earner and a lower superannuation balance.
Empowering Women by Women!
At Oracle, we offer a women based financial service by women which aims to help all women in need today and to stop the financial inequality. We work closely with women by providing financial education and guidance to assist women to gain financial independence. Its important to us as a financial services company to offer women education and support for them to grow not only in business and wealth but to support them with opportunities to become financially independent and in turn provide them with financial freedom. We’re a team of professional women – Financial Advisers, Accountants and Solicitors that will listen to you. There is no such thing as a stupid question.
Invest in your future
Investing a great strategy for women to help grow their wealth. It’s important to understand the complexities of investing can be tricky. This is where a financial adviser comes in.
A financial adviser can guide you from early stages of planning, implementation and regularly assessing your situation and goals. This involves setting up an investment plan with an adviser where they will guide you on clearing debt to prepare to invest, create a budget and savings plan, review superannuation, identifying investment goals, saving for investment, and assessing your investment plan on a regular basis to ensure you are on track to achieving your investment goals.
A financial adviser can assist you figure out your level of risk you are willing to take with investing. Also, educate on both the potential risks and rewards of investing. You don’t need to have a lot of money to start investing, you can start with a small amount of savings, or you can begin setting aside a small amount that you can afford.
Get your superannuation on track
Getting your super on track is one of most important factors for women when closing the gap. There are many factors that impact women having lower super including lower income, time taken from workforce all impact women’s super balance. But there are some strategies that women can put in place to boost their super including:
Salary sacrifice
Salary sacrificing is adding before income-tax straight into your super fund by your employer, on top of what they might pay you under the super guaranteed. This involves foregoing some of your salary now, to make the additional contributions to your super fund.
Check out moneysmart super contributions optimizer tool which will show you how a small contribution can make a big difference to your super savings.
Super splitting
This enables a women’s partner to divide their superannuation contribution between their own funds and those of their partner.
Unlike spouse contributions which involve the payment of your own funds directly to your spouse’s super account, contribution splitting involves the transfer of a portion of the contributions made to your super account to your spouse’s super account. Contributions that can be split generally include your employer’s Superannuation Guarantee contributions, salary sacrifice contributions and personal after-tax contributions for which you’ve claimed a tax deduction. The contributions need to have been made or received in the previous financial year. Note that you cannot boost your spouse’s super by splitting any of your after-tax super contributions, other than those for which you’ve claimed a tax deduction.
Out-of-pocket contributions
Keeping in mind that you can’t access your super before you retire, you might want to contribute regular – affordable – amounts to your fund.
Put aside extra money into super
By examining your budget and spending habits, this will allow you to find additional cash within your budget and boost your super savings. Saving is much easier if you commit to putting the money aside at the start of your pay period. And spending what is left, rather than trying to limit your spending and saving the amount left over.
You don’t need to make your personal contributions as a single lump sum – you can make payments throughout the financial year. Your super fund will instruct you how to make personal contributions. Most funds offer you several options including BPAY®, direct debit or directly through your bank account. You may also be eligible for a super co-contribution from the government. If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government may also contribute (called a co-contribution) up to a maximum amount of $500. Check out the ATO to find out if you meet the criteria for super co-contribution.
Make the most of windfalls into your super
If you’re lucky to come into some extra money from an inheritance, or a lump sum from tax refund or sale of car, it would be beneficial to you by putting some of it towards your super balance. Make sure you are aware of contributions cap before making any lump sums to your super.
Aiming for high
Another major step towards improving women’s financial wealth is knowing your worth.
Many professions have independent guides on salary based on qualifications and experience. It’s vital to understand if you’re being paid appropriately, there are many salaries guides to help you work out the salary you should be being paid including Hays Australia Salary Guide 2022-2023.
The next step is meeting with your employer to discuss your getting yourself a pay rise you deserve, there are many helpful sites that assist you to plan and execute the dreaded pay rise discussion. It can be nerve racking asking for a pay rise, but the better prepared you are, the more likely you are to succeed.
Summing Up
No matter what age or stage of life – all women need to start looking after their financial wealth today, in order to retire with substantial retirement savings. There are many strategies we’ve mentioned above, that women can utilise to close the gap with the help of financial plan. You’ll be on your way to a building your financial wealth and securing a brighter future.
Let us get you on track with financial independence today with our Empower Women by Women financial service!
