Taking a career break costs Australian women $159,590 in retirement savings, new research has found.
The research, commissioned by the REST Industry Super fund, indicates this is one factor contributing to the $283,141 superannuation gap between women and men at retirement.
Two-thirds of working Australians take at least one career break at some point, with an average of 3.5 breaks overall. Breaks for health reasons are the most common, particularly for men. The research found that only 16% of women made a superannuation contribution during their career break and only 6% sought professional advice before the break.
“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, REST General Manager for Brand, Marketing and Communications.
“We know health breaks can come out of the blue, but just as many are planned. Among those who took career breaks, 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% making voluntary contributions to their super during that time.”
The most common reasons for women to take a career break were maternity leave (50%), to care for children (49%) and health reasons (45%). According to REST, women returning to work after a career break tend to earn 29% less than male counterparts.
The research also found that women were 30% less likely than men to make any retirement income plans for the break.
“Awareness, advice and commitment are the keys to ensuring a more financially stable future before, during and after a career break,” said Ms Atley.
“Our research has exposed that women in particular are feeling the burn when it comes to their superannuation shortfall.”
“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. Nearly $160,000 is a significant hit to a woman’s retirement income – a hit which can be lessened with some careful considerations and actions.”
“The fact that women are more likely to take their breaks by choice provides an opportunity to consult an advisor to ensure they’re keeping up their superannuation contributions. A short call with a financial advisor can be an important step in planning for a comfortable retirement.”