If you’re a woman earning an income in Australia, then you’re likely to retire with less super to enjoy than your male counterparts. Australian women retire with 46% less super than men, on average. This is largely because women usually retire earlier, earn less and are more likely to take time out of the workforce to raise children or care for relatives.
This inequality is not only unfair, it can also diminish a woman’s financial independence in retirement. It is especially worrying, since women tend to live longer than men. So women actually need more money to finance their retirement years. Australian women are two and a half times more likely to live in poverty in their old age – simply because they’ve been neglecting their financial stability.
Many women are putting money in the bank but don’t know what to do with it, or they’re investing but want more inspiration and ongoing support. Some are in major financial turmoil, or just don’t know where to start.
Let’s say you earn $85,000 a year and are setting aside 20% – good on you! But if you put it into a savings account rather than investing more broadly, guess what that costs you over a decade? It’s $20 a day!
Imagine $20 fell out of a hole in your purse every day… how long would it take you to fix it?
How can I maximise my super as a woman?
Five important steps while working.. to get a better retirement:
- Treat super as something important. It’s simply a lightly taxed entity that appears more complex than it is. But if you only think about when you retire, it could be too late. The earlier you start taking control of your super, the more likely you’ll be better placed at retirement.
- Find someone who can give you impartial advice and remove the appearance of complexity. Such ongoing advice as you progress through life can ensure peace of mind from a well-thought out plan that keeps pace with life’s changes.
- If you have more than one super account (as often occurs if you’ve worked at several places), look into consolidating it. That way you can avoid paying multiple management fees. Some things to consider before combining your superannuation fund are:
- Does your existing fund have any termination fees?
- Can you get the same level of insurance in your chosen fund
- Can your employer contribute to your chosen fund?
- Does your chosen fund give you enough control in future?
- Make your own super contributions while you’re working. It will mean a little bit less in your regular pay now but there can be tax benefits attached to voluntary super contributions and you’ll have more money to enjoy when you retire. What’s more, if you earn less than $51,813 a year, the government can add up to $500 extra to your super account. Depending on your income, this co-contribution can be as much as 50¢ for every dollar you contribute yourself from your after-tax income.
- If you have a partner, chat with them about how he or she can share the parenting role to help boost your super by:
- Making a ‘spouse contribution’ to your super account
- Arranging for contribution splitting from their employer
The Bottom Line
Women’s wealth is increasing and as life expectancies rise, so too does their need for a solid financial plan. Women should find financial advisers who will work with them to preserve and build their wealth and plan for the future. While the market is increasing and time relentlessly marches on, make sure you are also growing your own retirement potential.
If you would like to discuss the information in this article or your investment options with one of our female wealth management professionals, get in touch today!
Disclaimer: All information in this article is intended to be general in nature for discussion purposes only. So you should not rely on it and seek personalised professional advice before making any decision.