Closing the Super Gap for Women

Women in Super

Short read: 1min 30 sec

Did you know Australians will need nearly $60,000 as a couple or just over $43,000 as a single person per annum to retire comfortably? Of course, this depends on your definition of comfortable.

Accruing a comfortable nest egg is something that can cause us all stress. And for women in Australia there is a significant gap in superannuation balances that just isn’t going away. According to the Workplace Gender Equality Agency the gap the average Australian woman retires with $92,320 less than the average Australian man.

Why you ask?

There are three significant reasons. Firstly, on a national average women earn less than men. They also have longer life expectancies – meaning they have much longer to spend much less. And importantly women who have children take more career breaks and spend longer in part time or casual work while children are little.

Combine this with general barriers like low financial literacy and younger people not being worried about super and we end up with stats like only 22% of single women being ready to retire in comparison to 31% of single males.

However, ladies, there are some tips and tricks you can apply to close this super gap and to assist you in becoming retirement-ready.

We are strong believers in starting early, even if it means starting small! Clients that have progressively chipped away at growing their super are often surprised at how far they’ve come even in as little as five or 10 years.

Tip 1: Know your super fund

While working, your employer is making superannuation contributions on your behalf that are equivalent to 9.5% of your current annual wage/salary.

However, if you haven’t supplied your employer with instructions about what kind of super fund you choose, it is likely their contributions are going into a fund of their choice, possibly not one you would personally prefer.

It’s vital for you to select the fund you’re most comfortable with. In order to find the ideal super fund, ASIC have published six key things to consider:

  • Fees – ASIC says the lower the better – we say cheapest is not always best. If your fund has cheap fees but doesn’t offer you features you want like insurance or certain investment options, it may not be the best choice for you. Consider the fees and the value.
  • Investment options – ensure you look at the sort of investments the fund offers (generally a mix of shares, cash, property). It’s important that your super investments meets your needs, time frame and that you are comfortable with the risk.
  • Benefits – certain super funds will allow employers to pay more than the standard 9.5% contribution or allow you to contribute more.
  • Performance – ASIC recommends you pick a fund that has performed well over the last five years, rather than a one hit wonder fund with good performance only in the last 12 months. However, it’s always important to consider the investment principle that past performance isn’t always a reliable indicator for future performance.
  • Insurance – does your fund offer insurance, what type and what is the cost?
  • Service – how easy is it to contact the fund – do they offer an online portal so you can easily look up your super performance and check that your employer is making the required contributions?

We’ve made all this sound easy however in practice it’s tricky to get it right and everyone is different. There’s a multitude of funds with different investment and insurance options all offering you the promise of great returns and a comfortable retirement. It can be overwhelming so we recommend seeking the advice of a professional financial adviser.

Tip 2: Grow your nest egg

We are strong believers in starting early, even if it means starting small! Clients that have progressively chipped away at growing their super are often surprised at how far they’ve come even in as little as five or 10 years.

There are many ways you can enhance your super to get you to the lifestyle you want in retirement:

  • Salary Sacrificing: pre-tax salary sacrificing can be a tax-friendly way of boosting your super. This can be done through asking your employer to pay part of your pre-tax wage/salary into your super.
  • Make your own contributions! After-tax contributions are simple way to increase your super. Plus, these contributions do not fall under the 15% contributions tax that apply to other contributions made into your super.
  • Ask your partner/spouse to make contributions on your behalf into your super account. These contributions could possibly be claimed as a tax-offset to them.

Tip 3: Make it a priority

Take control of your finances and seek expert advice. Superannuation can be a complex area – no matter what gender you are. Remember Atticus Business Accountants is licenced and an expert in providing advice on Self Managed Super Funds (SMSF). We can give you an honest answer about the costs, benefits and compliance requirements of an SMSF and if they’re an economical choice for you.

Our team believe in working closely with your other service providers to help you achieve your goals – we can recommend a respected local financial planner, or get in touch with yours to ensure our actions are aligned and we’re doing our best for you.

Start closing the superannuation gap now ladies! Contact the Atticus team on 07 4642 5800 or make a booking online.

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