When it comes to super savings, women in Australia are likely to have significantly less than men. The average Australian woman retires with around half the balance of the average man. This is because women (still!) earn less than men for equivalent jobs and they’re more likely to have a career break to raise children.
Combine this with a longer life expectancy and women are less likely to have enough for a comfortable retirement. Very few women think their super will be enough for retirement, and unfortunately many women don’t know how much they’ll need for a comfortable retirement or are leaving this issue to their partners.
Superannuation is one of the most important and efficient investments you can make. It is concessionally taxed, has flexibility with insurance and can provide added incentives when you contribute money.
Acknowledging that wages for women are still generally less than those of men and that women are more likely to take time away from paid employment to raise their families, growing superannuation can seem almost impossible.
However, none of the above will matter as retirement draws nearer. So, regardless of age or circumstances, women need to understand superannuation and start contributing as soon as possible.
Here are some tips that may help the process:
1. Have one superannuation fund
Many women have worked for a number of different employers and can end up with relatively small amounts in a number of superannuation funds. Multiple super accounts usually equals multiple fees. Consolidating your superannuation into one account will make it easier for you to track your retirement savings.
2. Find any lost superannuation
If you have changed jobs a few times, or had short term work contracts, you may have super accounts that you have forgotten or didn’t know about. You may have moved house and lost track of your superannuation. To search for lost super visit www.unclaimedsuper.com.au or call the tax office on 13 10 20.
3. Use salary sacrifice into superannuation
If you are currently working, you could talk to your employer about sacrificing some of your pre-tax income into super. Salary sacrifice can have tax advantages as you may reduce the amount of income tax you pay. This is not for everyone so you should seek financial advice as to whether this would be beneficial to you.
4. Make additional contributions
If you have some spare cash, you may want to make after tax contributions to superannuation. Many of the superannuation funds have the option to set up a regular direct debit, BPay or electronic funds transfer. Making additional contributions may give you access to the government co-contribution.
5. Government co-contribution
You may be eligible for a free boost to your superannuation. If you earn less than a specified amount and make a voluntary after-tax contribution to superannuation, the government could contribute up to $500 each financial year to your super account. This is a great incentive and could give your superannuation a real boost. Of course, these figures may change with Government policy. To ensure you understand the conditions, seek financial advice.
6. Super splitting
You may be able to share part of the super contributions you or your partner make each financial year. Most funds now have super splitting available.
7. Tax deductions
Are you self-employed? That is, do you earn less than 10% of your income from an employer? If so, you may be eligible to claim a tax deduction for any voluntary super contributions you make. Be careful as contribution limits do apply.
8. Check your insurance
You may be surprised to find that you have Death and Total and Permanent Disability insurance through your superannuation fund. Some superannuation policies also offer Income Protection insurance. This is often a cost-effective way to structure your insurances. Insurance is a vital part of your financial security and you should make sure you have enough cover to protect you and your family. Again, this is not relevant for everyone so you should seek financial advice as to whether this would be beneficial to you.
9. Choose your super fund
Many of us do not make an active investment selection for our superannuation entitlements. Most people do have choice and you should make sure you are comfortable with how your retirement savings are invested. Do your research or seek advice.
10. Seek advice
There is a common theme. Research your fund and make informed choices when it comes to superannuation as this can make a real difference come retirement time. The internet has many great websites if you would like to do your own research.
Why not schedule a meeting with your financial adviser now?