Single women are the least likely to be able to afford even a modest lifestyle in retirement

Australian women’s labor force participation has increased substantially over the last few decades, yet they are still retiring with only half as much money in their pension funds as their male counterparts.

Three main causes of the pension fund gap are:

1. The gender wage gap—estimated by the Workplace Gender Equality Agency at 18%.

2. Time taken out of paid employment—to care for children or other family members.

3. Working hours—women are more likely to work part-time than men.

Women also live longer than men and generally retire younger, so on average they spend longer in retirement than men do.

Whilst retirement standards have a tendency to assume that retirees own their homes outright, and therefore have very little in the way of housing expenses, this is often not the case for single female retirees—a factor which considerably reduces their ability to afford even a modest lifestyle.

Solomon W. Polachek has written about equal pay legislation and the gender wage gap for IZA World of Labor, noting that policies promoting greater lifetime work for women are most effective in reducing the gap. He recommends actions that increase women’s incentives to invest in education and training, boosting their human capital and enabling them to better climb the corporate job ladder. He also observes that promoting high-quality day care would have a similar effect.

But for the current group of retirees, policies targeting assistance to those in genuine financial hardship, particularly those who do not own their own home, may be more effective for improving living standards.

Read more about this story in the New Zealand Herald.

Related articles:
Equal pay legislation and the gender wage gap, by Solomon W. Polachek
Wage compression and the gender pay gap by Lawrence M. Kahn
The determinants of housework time, by Leslie S. Stratton