Research released today by REST Industry Super has revealed that women are taking a $159,590* hit to their retirement savings due to taking career breaks, which can be potentially worsened by not making a financial plan when it comes to their super ahead of planned career breaks.
The research titled Making a Break shows that just six per cent of women participating in the survey sought professional financial advice before taking their career break and less than one in five (16 per cent) of women made a superannuation contribution during their break, resulting in the aforementioned loss to their retirement balance.
The average age at which women take their career break is 33 years, with maternity leave (50 per cent) the primary reason, followed by leave to care for children (49 per cent), and health reasons (45 per cent). Overall, health breaks are the most common type of career break taken by Australians.
“When we think about career breaks, we typically think about parental leave or an extended holiday– it is interesting to see the large proportion of working Aussies forced to take breaks due to their health,” said Mary Atley, General Manager of Brand, Marketing and Communications at REST.
“The lack of planning for their superannuation is concerning, with only 10 per cent of respondents consulting a financial advisor prior to their break, and just 21 per cent making voluntary contributions to their super during that time.”
Lack of or ineffective negotiations with employers upon return to work continue to contribute to the superannuation gap. Women returning to work after a career break tend to earn 29 per cent less than their male counterparts, an average difference of around $16,000 per year. In order to return to an income equal to before their career breaks, women had to work 11.8 months, a full month longer than men, which is at 10.7 months.
Ms Atley said, “Awareness, advice and commitment are the keys to ensuring a more financially stable future before, during and after a career break, There are a range of structural issues which contribute to the gender super imbalance, but our research shows that the lack of financial planning ahead of a career break is potentially one of the most important factors.”
“A short call with a financial advisor can be an important step in planning for a comfortable retirement,” Ms Atley advised.