Money and Life
(Financial Planning Association of Australia)

Women are entering retirement with significantly less superannuation and personal savings than men – leading to a growing class of women living out their golden years in poverty. We explore how the gender pay gap is adding to this growing epidemic.

While most people have heard of the ‘gender pay gap’ (GPG), many of us are less familiar with the impact it has on both individuals, and, our society as a whole.

According to the Workplace Gender Equality Agency (WGEA), the national gender pay gap is 13.4 per cent (when based on ABS average earnings data) and up to 20.1 per cent (based on total remuneration data supplied by Australia’s largest companies).

In real terms, that means women take home between $242.20 and up to $491 a week less than men, on average.

Now you could be forgiven for thinking that doesn’t apply to you (or to the women you know). But you’d be wrong. As WGEA data shows, there’s a gender pay gap “in every industry and occupational category in Australia.”

It’s one of the major reasons why women will earn less on average, accumulate less superannuation and savings over their lifetimes than men – and are therefore more likely to live in poverty in old age.[i]

The gender pay gap is also important for the economy, as it affects our productivity and national output. Modelling by KPMG shows that halving the gender pay gap could increase our GDP by 60 million dollars (around 7%) – which would mean a huge bump in everyone’s standard of living.

Read more: Why women need a unique focus on their finances

So what is the gender pay gap?

In Australia, the gender pay gap is calculated by the WGEA using ABS earnings data. It’s a measure of “the difference between the average earnings of women and men in the workforce”. [ii]

It’s not the same as ‘equal pay’, which means men and women being paid the same amount “for work of equal or comparable value” (although that is a known contributor to the GPG).

So for example, in November 2020, women working full-time earnt $1562 on average, compared with men, who earnt $1804.20. That puts the national gender pay gap at 13.4 per cent.[iii]

In reality, the WGEA estimates the real gender pay gap is much higher. Based on data the agency collects from businesses with over 100 employees (which includes more than four million employees in total), the gender pay gap is actually 20.1 per cent when you include superannuation, bonuses and additional payments.

That means men who are employed full-time, “earn on average $25,534 a year more than women working full-time”. [iv]

What causes the gender pay gap?

Research by the WGEA and KPMG in 2020 found the causes are well known and come down to, “enduring gender stereotypes about the roles men and women play in paid work and caring”.

The main drivers include gender discrimination, women working in female dominated industries and those industries receiving lower pay (occupational segregation) and time out of the workforce due to caring for children and elderly family members.

The gender pay gap often starts from the time people enter the workforce. For example, female university graduates earn on average 4.8 per cent less than their male counterparts.

How does it affect women’s financial security?

The gender pay gap doesn’t just affect your weekly take-home pay. It has far reaching consequences for women’s (and children’s) financial security over a lifetime.

One of the easiest places to see the impact is on superannuation. Women retire with 47 per cent less super than men, yet live five years longer on average.

This means that “40 per cent of older, single, retired women live in poverty and experience economic insecurity in retirement”.

Consider also the impact it has on a woman’s ability to support a family following divorce or separation. There’s a million single-parent families in Australia, and 81.6 per cent of them are headed by women. Financially speaking, they’re one of the most disadvantaged groups in the country.

37 per cent of single-parent families headed by women live in poverty. They battle poverty at twice the rate of single-parent families headed by a man and earn around half the weekly median income compared with all households.

Poverty like this has broad implications for the community as a whole. Those who grow up in poverty have worse health, education and social outcomes than their peers, as well as higher rates of unemployment and lower earnings when they do enter the workforce – contributing to nationally lower levels of productivity.[v]

So what to do?

The gender pay gap is a social and economic issue that has long been pervasive in Australia. While the level has fluctuated over the last 20-years, it hasn’t really improved, despite greater awareness of the issue.

While it’s important to keep up pressure at all levels – there’s much that business and political leaders can do – women need to focus on their own financial wellbeing and take action to minimise the impact on them personally.

That means having proper planning, investment and protection strategies in place, including:


  • Start making voluntary contributions as early as you can, to help offset the impact of any career breaks.
  • Get your super settings right. Speak to a financial professional for advice on the level of risk and investments types that are right for you.
  • If you have a partner, look into super contribution splitting and the super tax offset for contributions on behalf of your spouse.


  • Make sure you have the right level of life insurance, total and permanent disability insurance (TPD) and income protection insurance in place, in case something unexpected should happen.


  • Aim to build up your emergency savings fund, so that you have at least three months’ worth of living expenses readily available.

Given that COVID-19 has been shown to disproportionately affect women’s employment and incomes, the issue of financial equality is more relevant now than ever.


Not sure if you can afford to retire? If you’d like expert advice to help you reach your financial goals sooner, speak with a financial planning professional today. You can find a Certified Financial Planning professional using our Match My Planner tool.

[i] WGEA, The gender pay gap

[ii] WGEA, The gender pay gap

[iii] WGEA, Australia’s gender pay gap statistics 2021

[iv] WGEA, Australia’s gender pay gap statistics 2021

[v] The Smith Family, Poverty in Australia

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.