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The great financial challenge facing Australian women

December 26, 2017

If you’re a working Australian woman with kids in your mid to late 40’s right now you’re probably aware that something is not adding up with regard to your finances. Except for very astute female investors, independent business women or those from “old money,” you’re quite possibly going to be one of the 1 in 5 Australian women yet to retire who will have insufficient retirement savings.

According to research conducted by the Financial Planning Association of Australia, one out of every four Australians experiences acute stress levels over finances. 37% of women feel ‘extremely’ or ‘very’ stressed about their financial situation compared to men at 22%. This is likely to be due in part to issues such as the Gender Pay Gap which currently sits at 17.9% or a difference in weekly earnings (on average) of $284.20 as reported by Security4Women.org.au. This reality presents a real challenge for women hoping to achieve financial security & wellbeing.

If you’re a female in a heterosexual married (or de facto) relationship, you’re likely to retire with less than half the retirement savings of a male partner yet at the same time you’re likely to live longer too so you will need more money than they would do to live comfortably until death. It’s worth acknowledging at this point that now Australia has passed same-sex marriage laws, there may eventually be data collected about the financial realities for couples in same-sex marriages but at the time of writing such information was very thin on the ground. So, for the purposes of this exercise, the focus here will remain on women cohabitating within a heterosexual relationship. However, it’s safe to assume that whoever takes on the primary caregiving role for children in any family will have some significant disadvantages to overcome when it comes to the accumulation of personal wealth.

Now, if you and your partner have children together, the fact is that as a woman you will have more time out of the workforce bringing kids into the world and caring for them through to adulthood than their dad. If those kids are healthy & happy that's fantastic, but if you happen to have kids with special needs that require more care & parenting, as the mum/primary carer, you’re going to be even more financially disadvantaged. And if you happen to be considering divorce, you should know that you & your soon-to-be ex-husband will receive a financial blow that is likely to set you both back financially in retirement. Nervous? You should be. But that’s not the point. The point is that if you’re a woman reading this you need to raise your antenna. If you’re a bloke, improving awareness & perhaps even working with the women in your lives to develop a specific financial strategy with them to meet their needs, could help deliver increased financial security for those you love.

Most husbands and fathers work hard to provide for their families & though traditionally the majority share of caring has been done by women, the trend is showing that Australian dads are continuing to be more hands on. However, even our best, hardest working
SNADAHs (sensitive new aged dads and husbands) can’t compensate for the financial reality that exists for women. The truth is that it’s in the interests of women to obtain and retain a level of financial independence, a sense of empowerment & perhaps even some autonomy when it comes to making financial decisions that may impact her future.

In this modern world, women cannot & many would argue should not assume that their financial needs will be taken care of by their male life partner. By the same token, Australian society should expect to support & care for the women who allocate a significant part of their lives to raising our country’s next generation of citizens (& future taxpayers). By the way, it’s a cop-out to argue that it’s a woman’s choice to have children & take time out of the workforce, therefore, they must accept full responsibility for that financial burden. Men choose to have children too. This is about balance, equity & women stepping up as the heroes of their own financial story.

It's in the whole family’s interest, especially in those families with daughters, that Australian society moves toward ensuring women receive an adequate share of revenue generated by the household to compensate for jointly made decisions that they should take on the primary caring role, thereby reducing earnings over that time & potential career advancement opportunities especially during early years.

The Government has some policy thinking to do here too. Income splitting, tax deductions for childcare that will support women returning to work earlier, perhaps even a few years of tax-payer funded Super contributions for stay at home parents could help. This is just spit-balling of course & none are particularly well thought out policies but you get the idea. The Government has started addressing these issues by developing some pretty clever money tools specifically designed to help women improve their financial management skills. Check out the ASIC Money Smart Women’s Money Toolkit via the link below.

Consider making 2018 your year to take control of your finances. The first step will be to have a chat with your Rowe Partners accountant so that they can capture a summary of your concerns, current circumstances & long-term objectives that will provide the basis of further discussion & planning with a specialist financial advisor.

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