Financial Security for Millennial Women

Young Australian women are failing to implement the structures necessary to guarantee financial security in the long-term.

At the age of retirement, Australian women have just 53 percent of the savings half the superannuation and significantly less assets than their male counterparts. In fact, in 2012, 34.6 per cent of women had no super at all.[1] As a consequence, women experience higher rates of poverty than men in old age and are twice as likely to rely on the aged pension (WGEA, 2015). Gender income inequality has significant implications on the Australian economy and for the welfare of Australian women, particularly for victims of domestic abuse and those recovering from divorce, separation or widowhood.

A combination of factors both inherent and external to the employment system is contributing to the weaker relative financial position of Australian women.

The current superannuation guarantee system assumes 40 years spent in continuous, full-time employment to accumulate sufficient savings for retirement. However, the average Australian woman works half the years of the Australian male, with career breaks often taken to look after children. Of the years she does spend in work, many are spent in part-time employment. Though the number is rising, women represent just 37.5 per cent of all full-time employees.[4] This problem is exacerbated by a longer life expectancy and the significant gender pay-gap, which still stands at 12.9 per cent.

“Women spend half the number of years in paid employment as Australian men, which means they need to be smart about the superannuation and investment decisions they do make.’ (WGEA, 2015)

With the divorce rate at just under 30 per cent, and the number of divorces involving children at nearly 50 per cent, attaining financial security for Australian women is more important than ever. Divorce has a significant impact on retirement savings of women in two ways: firstly, there are fewer opportunities for women to build their wealth post-divorce than men (WGEA, 2015) and secondly, through the standard division of assets, of which women own significantly less.  A 2015 study found that being single appears to increase the risk of poverty in old age significantly, with divorced women holding fewer assets than widows or women who never married.

The Rice Warner Report, ‘For Richer, For Poorer’ found, ‘single women are likely to experience the worst outcome in retirement compared to couples and single men, with many unable to achieve a comfortable standard of living’.[5] The report says a couple in their 30’s on middle incomes can expect to have a retirement income of $75, 000 a year by the time they get to 60, whereas a single woman in similar circumstances would have about $38, 000 a year.[6] The issue is such that 77 per cent of women relying on some form of age pension in retirement.

This means that single women in Australia are structurally disadvantaged in the generation of retirement savings. 

There are also behavioural reasons contributing to the relative financial position of Australian women.

Women are found to save less and to start saving later and be less likely to use financial planning services or undertake long-term financial planning (WGEA, 2015). Further, women are found to find dealing with money more stressful across all age groups, reflecting lower savings, lower incomes (particularly relative to debts) and lower levels of home ownership (ANZ, 2015).

Those in the 18-24 age group were found to have lower levels of engagement with financial information and are less likely to ‘keep an eye on household expenses’ (ANZ, 2015).

A 2015 study by ANZ Bank has shown that women have lower scores than men on financial knowledge and numeracy, less ‘confidence’ in asset allocation and investment decisions, both of which lead them to make more conservative financial decisions (WGEA, 2015).

However, the extent to which women have inherently different financial behaviour is contestable, given that other countries observe virtually homogenous financial patterns amongst men and women. In China, women’s appetite for risk-taking is identical to their male counterparts; and women are virtually as confident as men in their financial acumen (Morgan Stanley, 2016).

So, what is happening in Australia?

There is a clear gender gap in  in societal perceptions of women as capable financial decision-makers, reflected in the lack of women in senior financial positions in Australian financial firms.

Signs point to the pervasive and patriarchal culture that still dominates the Australian workplace and the domestic realm with female family members still largely excluded from financial conversations and decisions.

If women do possess less financial ‘confidence’, then Australia is facing a serious problem, given females now comprise 46 per cent of all employees (WGEA, 2016). In fact, women now create, control and influence 27 percent of the world’s total wealth and by 2028, will control 75 percent of discretionary spending around the world. [8]

So, the advice for Australian women is:

1. Think long term and plan for career breaks: Find out how much money you’ll have in retirement and the steps you can take to increase it using the Retirement income Calculator. Get good advice: Find a financial mentor who you feel comfortable asking questions to.

2Save early: Whilst retirement might seem like a lifetime away (especially if you’ve just started working), getting into good habits when you’re young is a great way to set yourself up for a comfortable future.

3. Get to know your Super – managing your Super is easier than you think – it just takes a few smart moves early on in your working life. Check your statement online and work out how to make voluntary contributions, reduce tax and work out what government contributions you are eligible for.

  • Choose a fund for life
  • Combine your Super
  • Provide your TFN and pay less tax
  • Protect your income with the right insurance: Consider getting income protection for your partner if you’re on a single income

For example, if a woman contributes an additional $10 per week to her superannuation between the age of 25-35 in addition to her superannuation guarantee contributions, and then decides to leave the workforce permanently at 35. By the time she leaves the workforce, her contribution will have added $11, 631 to her mandatory superannuation.

For employers: Employees and financial services need to ensure leadership both embodies and embraces diversity. Consider offering seminars conducted by independent financial advisers focusing on women’s financial needs at critical life junctures, such as the transition to motherhood and retirement. Facilitate access to financial advice regarding retirement income, superannuation and other investment options should also be available as individualised advice for employees, through employee benefit packages or relationships with superannuation funds or financial service providers.

Wealth management firms should focus on providing an inclusive environment, where women feel welcome to ask questions and feel assured they’re heard and understood. “Advisors who understand and honour a woman’s financial, personal and social priorities are likely to win her trust, satisfaction and loyalty.” Financial institutions need to design strategies to improve the financial confidence of Australian women of all ages, by making available financial information, education and financial programs in line with the different career trajectories and priorities of women.

A 2015 study by Morgan Stanley found that those who educate a client by providing the information she needs to evaluate risk and make confident decisions are 49 per cent more likely; those who help a client align her investment goals with her life goals are 41 percent more likely to secure the client.[9]

Empowering women and instilling confidence in the ability of women to make well-informed financial and investment decisions will benefit family security, help protect children from domestic violence and for those who are married, help them to recover financially from divorce, separation or widowhood.

[1] (WGEA, 2015),




[5] For Richer, For Poorer – Retirement IncomesActuaries Institute White Paper – August 2015

[6] Liew, R, Sept 2015, Australians will still rely on age pension, Actuaries Institute report says, SMH Accessed 03/08/2016

[7] Peter Damisch et al., Levelling the Playing Field: Upgrading the Wealth Management Experience for Women (The Boston Consulting Group, July 2010)

[8] Ernst and Young, Harnessing the Power of women investors in wealth management, p. 1)


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