Did you know the average superannuation balance for a woman, according to ASIC's MoneySmart website, is just $180,000 for 55- to 64-year-olds? This compares with the average superannuation balance for a man which is $322,000.
The primary reasons for the much smaller balance – time out of the workforce to raise children, lower earnings capacity either through part-time work or lower wages, and caring for others, including elderly parents.
Traditionally women are so involved with the day-to-day running of their family affairs they forget about helping themselves. However, it is so important to make your financial future a priority.
Consider the following facts:
- Women are marrying later in life
- Almost 1 in 3 marriages end in divorce
- Just over 80% of lone parents are women
- Wages for female employees have improved but earnings still represent only 60% to 85% of male earnings
- Longer life expectancy means 80% of women are spending at least a decade on their own
- Almost 1 in 3 women will retire with no superannuation at all
(source: ABS,Dept for Community Development)
Superannuation strategies for women
The Federal Government has attempted to address some of the issues by introducing measures as part of the superannuation reforms introduced from 1 July 2017.
Some of these measures include:
- Raising income thresholds for tax offsets in relation to spouse superannuation contributions
- Allowing employees to make tax deductible contributions.
- From 1 July 2018 individuals who have irregular working hours will have the ability to 'catch up' on unused concessional contributions
Small changes can have a big impact
You can improve your retirement balances by implementing simple things such as:
- Understanding where and how your superannuation money is invested
- Save by making extra contributions if possible, no matter how small
- Consolidating multiple superannuation accounts to save on fees
Deb, age 51, earns $75,000 pa and her employer pays the standard 9.5% super guarantee charge (SGC). She currently has $150,000 in super.
At retirement at age 65, it is estimated Deb would have saved approximately $348,000, which could pay her roughly $37,000pa as pension income.
However, Deb would like to have a comfortable retirement which, for a single person, equates to approximately $43,500 pa based on APRA standards.
She would need at least $510,000 at retirement to achieve this level of income.
She would need to contribute an extra $10,000pa in addition to her SGC.
At her current contribution rate Deb is not going to meet her desired goal for retirement.
Following a review with her adviser, Deb can only afford to contribute an extra $100 per week into super, or $5,200pa, and thanks to the new rules, she is able to claim a tax deduction on these extra contributions.
It may not be the extra $10,000pa required but it will go a long way towards improving Deb's retirement situation. Deb could also delay her retirement if she wants to, thus allowing her more time to build up her super balance.
If you want to take charge of your financial future now and become your own 'Super' Woman contact your local Morgans office and speak to one of our qualified financial advisers.