I’ve met plenty of people skeptical about our superannuation system over my years as a planner and I get it. Believe me, I have to devote hours ever year to keeping up with the annual federal budget, managing legislative changes and getting my head around constantly changing tax and super laws. It can be a drag!
It’s also true that we retire with about half the retirement savings of most men, and some women retire with no super at all! But the reality is this, women live longer than men, making it even more essential that they accumulate enough superannuation to last them through retirement.
Having said that, women also face unique challenges when it comes to putting away retirement savings. Chances are, you’re still on lower pay than your male counterparts, you’ll take more time out of the workforce to raise the kids or care for your parents, and for those running a single-parent household, it can make it even more challenging to build a reasonable amount of super savings.
However, there are some simple strategies make it possible for women to overcome some of these hurdles, or make them less of an issue anyway…
Try and remember, that superannuation is actually your friend. It is a very tax-effective way to save retirement. Your super fund pays a low rate of tax on contributions and investment earnings while growing your nest egg. From age 60, you can withdraw your super tax-free.
Without any superannuation savings, many women are forced to rely solely on the age pension in their senior years. Remember, the pension is designed as a safety net and won’t provide at all for a comfortable old age. I’m not sure I could go back to a lifestyle that’s funded on around $23,000 per annum and you probably don’t want to either!
Firstly, don’t let your super funds get ‘lost.’ Try and ensure your funds are consolidated – this can help save on fees, but make sure you’re not losing valuable insurance coverage when doing so. When possible, try to put extra away into super. The ATO and website MyGov are making it easier than ever now to stay on top of your funds.
Affording an extra $20 – $50 per week now may not take food off the table but the additional money, plus years of compound interest will add up, and after all, your investing in your future self. Sounds like a win to me!
Understand your fund and make sure your employer is putting your full entitlements in regularly on your behalf. At the time of writing, this was 9.5% of your gross wage. Mostly now, we have super choice meaning that we’re able to choose the fund we want, and then check where your money is invested within the fund. Is it in line with your investment profile?
To grow your fund, you’re often able to make pre-tax contributions (Salary Sacrifice) or even post-tax contributions where no tax is charged. Depending on your circumstances, your partner may also be able to make contributions on your behalf and receive a tax offset for their efforts.
However you go about it, remember that you’re investing in your future and that superannuation is your money. It certainly pays to be savvy with your super! Sitting down with your financial adviser may reveal new and innovative ways you can make the most of your retirement savings!