Wealthtech social enterprise platform Super Fierce has calculated that the average Aussie woman who chooses to become a mums will face a $283,000 (present day value) hit to her superannuation savings by retirement. Based on these averages, Super Fierce calculated that until children reach 5yrs, reduced work hours results in around $8,000 per annum less Compulsory Superannuation Guarantee contributions, adding up to $44,000 post-tax.
What do the finding from the data show?
Productivity Commission data states the average Australian mother has a median of 2 children within 5yrs; takes 32 weeks’ full-time maternity leave for each child; and returns to an average of 3.5 days’ work per week until the youngest is 18 years old. Australian Institute of Health & Welfare (AIHW) data states the average Aussie mum has her first baby at 29.4yrs.
The loss of earnings trajectory for this average mother versus her peers who didn’t take time-out (9% for 2 kids) reduces contributions by $90,000 over the following 30yrs of work, while reduced work hours after children are over 5yrs of age has an additional $56,000 cumulative impact. Finally, the compounding impact of the combined $190,000 ($44,000 + $90,000 + $56,000) also not earning investment returns in super means an extra $93,000 lost.
This adds up to a staggering $283,000 in total lost super savings, before accounting for the current gender pay gap because the analysis only looks at the penalty for mums vs non-mums.
How can we try and reduce this disparity?
But Super Fierce founder & CEO, Trenna Probert, believes there are ways to address the imbalance. Trenna said, “The figures may appear bleak, but our calculations show that if a woman switches to the lowest-cost super fund at the average age women have their first child, 29.4 years, then she could save around $239,486 in super fees over her lifetime. That’s an extra $343.57 in her pocket each week once she retires, or an extra $50 a day.”
“In addition to this, we also recommend a new type of “push present”: a contribution to a woman’s super by her partner when they decide to have children together. Children don’t just happen to women. Most often the choice to have children is a joint one, so it doesn’t make sense that women disproportionately bear the financial burden, on top of the physical burden and impact on their general independence,” she also went ahead to say.
“So instead of flowers, soft toys, and spa vouchers we never get to use, push up the value of a mother’s superannuation. A top-up of around $10,000, in combination with switching to a lower fee fund, could help to reduce the super penalty facing new mothers to nil,” she added.
What is the case study for Super Fierce?
Trenna Probert founded Super Fierce after her own lived experience of financial hardship. She was forced to borrow $3k from her parents to leave a relationship with her 18-month-old son & start all over again, despite a prior high-flying career. Some nights she couldn’t feed her son.
But Trenna slowly rebuilt her confidence, career, and finances. Three decades after they met working as golf caddies in Japan, she married Craig Swanger, now her Super Fierce co-founder and investment Guru, bringing together three young children into a blended family.
When they became pregnant with their son Kit (who is now nine years old), Craig recognised the disparities women face when it comes to super. He stepped in and made regular contributions to Trenna’s beneficiary account until their joint SMSF reached 50/50.
Craig said, “The gender retirement gap is caused by two fundamental issues: the gender pay gap & the role of women as carers. The gender pay gap will take too long to fix for my daughter, & sadly even for her daughter. But understanding how the super system works means that today’s working women can help to reverse the financial impacts of their role as carers. As a father, I wanted to play my role in contributing to reducing the disparity.”
Trenna Probert also went ahead to say in conclusion, “The positive impact of Craig’s decision on my sense of confidence and well-being, especially after some tough years as a single Mum, is impossible to quantify. I would never have imagined a money decision could draw us closer together emotionally, but it did and has a lasting impact. I feel seen, valued, and respected.”