Steps women can take to improve their retirement readiness

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By Porsha Papas
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31 May 2021, 11:00 AM

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At retirement, an Australian woman’s superannuation balance is on average $157,050, versus men having an average balance of $270,710—a gap of $113,660 or 72.37%.

There is not one specific reason why women are lagging behind but rather a combination of factors such as lower lifetime earnings and career breaks due to childbearing and caring responsibilities.

What can be done about this superannuation gender gap?

Take control of your retirement savings

More than 40 per cent of Australians have several superannuation accounts which are collectively costing us more than $1.96 billion in fees each year. Consider transferring all your savings into one fund. This will help stop multiple fund fees from eating into retirement savings. And while you’re there, take some time to understand exactly how much you’re paying in fees, where your funds are invested, what insurance you hold, and what your fund’s long-term performance has been.

Maximise contributions

Here are five tips on maximising superannuation contributions before, during and after career breaks:

  1. Salary Sacrifice while you are earning an income
    You can currently salary sacrifice up to $25,000 a year (increasing to $27,500 per annum in the 2021/22 Financial Year) into your superannuation as pre-tax contributions. There is the potential to take advantage of the tax benefits this brings, keeping in mind the amount you have available to contribute will vary based on personal circumstances and how much your employer has already contributed via super guarantee contributions.

  2. Spouse Super Contributions
    A tax rebate of up to $540 may be payable to an eligible individual if he or she makes a spouse superannuation contribution of up to $3,000 on behalf of their spouse. The rebate is available if the receiving spouse earns less than $37,000 up to a maximum earnings threshold of $40,000 each year. Be aware, however, that if a spouse rebate is claimed for the personal contribution, that particular contribution will not be eligible for the co-contribution. To maximise superannuation contributions for the low-income earning spouse it can be prudent to make two separate contributions.

  3. Government Co-contribution Scheme
    Effective from 1 July 2021, if you earn $41,112 or less in a financial year as assessable income, the Government will contribute 50 cents for every dollar you personally contribute into your super, up to a maximum of $500 in that year. Alternatively, where your income is more than $41,112 but less than $56,112 in a financial year, your co-contribution payment will be adjusted based on your income and how much you personally contribute.

  4. Catch-up Concessional Contributions
    If you have not fully used your concessional cap since the 2018/19 year and your total super balance as of 30 June 2020 was under $500,000, you may be able to 'top up' your personal concessional contributions for this financial year with your unused contributions and claim a tax deduction if appropriate. Tip: Unused concessional contributions can be carried forward for a period of 5 consecutive years.

  5. Low Income Superannuation Tax Offset
    Under the Low Income Super Tax Offset (LISTO), eligible individuals will receive a tax offset up to a maximum of $500 which equals the 15% contributions tax on concessional contributions made during an income year. Therefore, individuals earning up to $37,000 of adjusted taxable income will effectively pay little or no tax on their superannuation guarantee (SG) contributions. Self-employed individuals making concessional contributions into super may also be eligible for the offset if their adjusted taxable income is below $37,000.

Of course, these strategy options are not just limited to women. All Australians should be aware of the options they have to increase their superannuation balance in preparation for retirement.

Find out more

Porsha is a qualified Financial Planner with over 5 years in the financial services industry. Porsha enjoys helping people achieve their goals and objectives by applying a common sense approach to planning.

"I believe Financial Planning can make an incredible difference to a person’s life, through financial coaching, support and assurance. Working together to achieve lifestyle goals and objectives via strategic advice and a trusted ongoing relationship."

If you’d like to discuss how this may affect your situation or what opportunities may be available to you, contact Morgans Port Macquarie office on [email protected] or via (02) 6583 1735.

General Advice warning: This article is made without consideration of any specific client’s investment objectives, financial situation or needs. It is recommended that any persons who wish to act upon this report consult with their investment adviser before doing so. Morgans does not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors, or omissions.

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