Finance Your Budget ‘Dire straits’: Older single women without children more likely to enter financial hardship

‘Dire straits’: Older single women without children more likely to enter financial hardship

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A groundbreaking Australian report has rubbished the assumption that single women without children will be better off in retirement than their child-rearing colleagues.

The report, co-authored by researchers from the University of Sydney, the University of NSW and Curtin University, found that two-thirds of childless women aged over 45 experienced an involuntary career break despite not having children.

This was because older single women were more likely to take on the caring responsibilities for elderly parents or disabled family members than similar-aged couples or childless single men.

Meanwhile, not having children affected their own caregiving needs in retirement, as they had fewer next of kin to tend to their needs.

The researchers also found the cohort was more vulnerable to financial hardship, as living on a single income hampered their ability to save and set aside money for voluntary superannuation contributions and home deposits.

According to a 2016 Senate Economics Committee submission, older single women are one of the fastest-growing cohorts experiencing poverty, with 38.7 per cent living below the poverty line.

Report lead Associate Professor Myra Hamilton, a principal research fellow at the ARC Centre of Excellence in Population Ageing Research, told The New Daily the study exposed how the “economies of scale” disadvantaged single women without children.

Despite having more chances to climb up the jobs ladder in their 20s and 30s, the impact of not pooling their income with a partner compounds over the following decades, she said.

“Women said although their earnings were OK, their weekly expenses were high and they did not have a disposable income to save,” Associate Professor Hamilton said.

“Couples get to pool the cost of housing, yet single women have to cover those same costs on one income – that’s not offset by cheaper bills and expenses, which are not proportionate to the difference in income.

“And as a result, women spoke of their struggles to accumulate adequate superannuation and the many hurdles entering the housing market.”

Housing hurdles get higher for single older women

The Australian researchers combed data from the Household, Income and Labour Dynamics in Australia (HILDA) survey – which captures nearly 4000 women in the cohort – with responses from 45 study participants.

Associate Professor Hamilton said some women indicated although they successfully saved for a home deposit, their applications were knocked back as lenders considered their reliance on a single income too risky.

With a lack of downsizing opportunities and a shortage of cheap housing, it created a strong sense of insecurity, with one in five participants renting out rooms or listing their homes on Airbnb to avoid a “cascading catastrophe”.

“Some of them didn’t have ongoing permanent work and there wasn’t the security of a second income that could be balanced against theirs if they could not meet their repayments,” she said.

“And there’s a sense that if something happens and they lose their job or have a decrease in their income, they could lose their house.”

The report recommends making aged care more accessible to vulnerable women; increasing the supply of social housing; and making amendments to anti-discrimination laws to reflect the fact that single childless older women still have family responsibilities.

Gap between older men and women still widening

Deloitte Access Economics partner Nicki Hutley argues that the economic gulf between men and women has widened during the pandemic.

The Financy Women’s Index, which Ms Hutley reviews, found the period it will take for economic equality to be realised in Australia has blown out to 36 years – up from 32 years.

And research by the Association of Superannuation Funds of Australia found the median superannuation balance for men aged 60 to 64 was 20 per cent higher than that for women.

Despite recent ABS payroll data showing women had secured more jobs during the coronavirus recovery than men, she told The New Daily the jobs recovery for women over 60 was still lagging.

With those women having precarious prospects to secure another job, it will widen the gap further once they reach retirement, she said.

“Women broadly, irrespective of whether they have children or not, are typically in lower-paid industries, we do have lower wages overall, we get overlooked for promotions and have slower career progression,” Ms Hutley told The New Daily. 

“For quite some time, it would have been quite difficult to buy a house [on a single income] and as the recent retirement income review found, being on the pension and not outright owning your home means you’re more likely to be in dire straits.”

The New Daily is owned by Industry Super Holdings

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