Australia faces a serious challenge. Despite important progress on gender equality over recent decades, a looming crisis now threatens the economic security of older women. Without urgent and bold action, we risk consigning further generations of women to poverty in retirement.

This week, the Super Members Council launched a new report laying bare the structural and life-course factors driving us towards the crisis. It is a wake-up call for all policymakers.

Gender super gap still too wide

The numbers are stark. Women today retire with a shocking 25% less super than men – or $51,000 less by the time they are 60-64. And women are around 10% more likely to have no super at all.

This gap is not merely a legacy of the past; it’s a living reality for hundreds of thousands of women across Australia approaching retirement today. Single older women who are renting are most at risk.

Historically, the gender super gap has been attributed to lower workforce participation, and the gender pay gap – with women still doing the lion’s share of taking time out of paid work to care for children.

Later life events a key driver of economic insecurity

But in a compelling new insight, this new research finds that later life events — separation and divorce, unpaid caregiving for elderly relatives, and family violence — are now among the most significant drivers of economic insecurity for older women.

These events can force women into early retirement or part-time work, eroding their ability to save and, in some cases, stripping up to $95,000 from their super balances.

Women are almost 1.5 times more likely than men to be forced into early retirement between the ages of 55 and 64, often due to the ill=health of a family member or inflexible work arrangements. Informal caregiving — most commonly for elderly parents or a partner — falls disproportionately on women, reducing their workforce participation and lifetime earnings.

The financial penalty is huge: a woman who becomes a primary carer at age 50 can expect to retire with $81,000 less in super and $2500 less income each year in retirement. It can plunge an older woman into a situation where they are only one unexpected expense away from financial disaster.

Separation and divorce, especially later in life, are also shaping this picture. One in six women aged 50 or older is divorced, and the economic fallout is often devastating. Women are more likely than men to lose home ownership after separation, face higher living costs, and experience persistent poverty if they do not re-partner.

Family violence compounds these risks, with up to half of women who leave an abusive relationship ending up in poverty or homelessness.

The compounding impact of these events on women’s retirement security is so profound, yet so often overlooked in policy debates: it’s time to put it at the centre.

The rental trap and housing insecurity

The crisis is most acute for single older women who rent. Nearly 60% of older female renters already live below the poverty line. As home ownership rates decline and rents rise, more women are entering retirement without the security of a home.

The age pension, while a vital safety net, is only just above the poverty line for homeowners and 23% below it for single renters after housing costs. Commonwealth Rent Assistance, though helpful, is not enough to keep many older women, already treading water with cost-of-living pressures, out of poverty.

These are deeply complex issues that must be solved by policy ideas that strengthen women’s economic security through having strong super in retirement.

Ideas such as allowing women to withdraw super early to fund house deposits have been proposed in the past, but the evidence is crystal clear: taking super out early only makes women poorer in retirement and simultaneously makes housing more unaffordable.

The policy answer lies in urgent action to boost the supply and availability of affordable housing, and to further help the most vulnerable older renters with the costs of renting.

What should come next

Australia has made important strides in closing the gaps in pay, super and workforce participation.

The advent of Paid Parental Leave, greater workforce flexibility, and the abolition in 2022 of a rule that excluded workers earning less than $450 a month from being paid super should rightly be celebrated.

But a bigger and bolder approach is needed, because on the current trajectory a crisis is inevitable. A crisis that sees thousands of vulnerable older women struggling to pay for the basics in retirement like food, energy bills and housing.

The good news is that for older women, even having a bit of super can make a big difference in retirement. A woman who retires with just $35,000 can translate that into a 15% increase in her income — or $5000 more a year — than if she were living just on the age pension. Super is a powerful protection against poverty in retirement.

The report lays out how, with the right policy settings, we can avoid a crisis and put more women on track for economic security in retirement:

• Unfreeze the Low-Income Super Tax Offset: This would help low-income women build their super balances and ensure the system is fairer for those who need it most.
• Close gendered loopholes in super coverage: Passing payday super reforms, paying super for all workers — including nannies, housekeepers, carers, and those under 18 — are essential.
• Remove barriers to workforce participation: Boost access to affordable childcare and aged care, and strengthen workplace flexibility so women can remain in or return to work after complex life events.
• Enable fairer super splitting in divorce: Ensure super is split equitably in all divorce settlements, not just those handled in the courts.
• Boost Commonwealth Rent Assistance and invest in social housing: Immediate increases in rent assistance and long-term investment in social housing are critical to protect vulnerable older women.
• Simplify the super and age pension systems: Make these systems easier to navigate, with better access to information and support for those facing complex life events.

The economic security and dignity of older women in retirement is not just a women’s issue – it is a test of our national values and our commitment to a fair go. We must ensure that every woman, regardless of her life trajectory, can look forward to a secure and dignified retirement.

The views expressed in this article may or may not reflect those of Pearls and Irritations.