The impacts of career breaks - women and super

We want to equip women at every life stage with simple ways to maximise their super when taking a career break.

Rest commissioned research*, Making a Break, to better understand the circumstances surrounding Australians taking breaks from their careers and the financial impact this has on their superannuation and retirement.

It explores the number and types of career breaks that working Australians take, including the stages of life these occur. Notably, it explores the behaviours of men and women in financially preparing for time off work and the consequences of these actions on their retirement savings.

The research revealed that two-thirds of working Australians have taken at least one career break at some stage in their working lives, with an average of 3.5 career breaks overall. Health breaks were reported as the most common reason for career breaks, particularly among men, while maternity and leave to care for children were the top reasons for women.

Here's what our research told us:

- 2 in 5 (42%) career breaks taken by Australians were forced by circumstance

- Women are 30% less likely than men to financially plan for their career break in terms of their superannuation

- By retirement, men have 47% more retirement savings than women (with one career break each)

- The average working woman has 4.2 career breaks; costing their retirement balance $159,590+

- Health breaks are the most common type of career break taken by working Australians (33%)

- Women returning to work after a career break earn 29% less than their male counterparts.

Just 6 per cent of women sought financial advice before taking their career break and less than one in five women made a superannuation contribution during their break.

The research also found that 53% of career breakers did not consider the long term financial impacts of their break, costing women an average super saving of nearly $160,000+.

Whether career breaks are planned or come out of the blue it's worthwhile encouraging employees to speak to a Rest Adviser^ either before, during or after a career break. A Rest 
Adviser can help them identify which strategies may be available to them that may not have been before, including the Government's co-contribution scheme or spouse contributions.





*The survey was conducted by Lonergan Research between 4 October and 9 October 2017 of 1,030 Australians (both males and females) who have ever taken a career break of at least three months.

+This is the economically modelled amount of lost superannuation balance of working women at the retirement age of 67 between those taking no career breaks and those taking career breaks, of which they took 4.2 career breaks on average. The calculations are based on self-reported cost per career break; 9.5% compulsory contribution to superannuation is assumed for the entire working life; 15% contribution tax; and superannuation account balance is compounded annually at 4.95% (based on average 10-year rate of return after tax and fees from APRA Annual Fund-level Superannuation Statistics 2016). No voluntary contributions are modelled. The results are on 2017 Australian dollars with no adjustment for inflation.

^Rest financial advice is provided by Rest Advisers as authorised representatives of Adviser Network Pty Limited AFS Licence 232729 ABN 25 056 310 699.

 

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Rest Advice is provided by Rest advisers as authorised representatives of Adviser Network Pty Limited AFS Licence 232729 ABN 25 056 310 699

Awards and ratings are only one factor to consider when deciding how to invest your super. Further information regarding these awards can be found at Rest.com.au/about-Rest/awards. Past performance is not an indicator of future performance. SuperRatings Pty Limited does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for details of its ratings criteria. For further information about the methodology used by Chant West, see www.chantwest.com.au