Women retire with approximately 42% less superannuation than men.
Generally, women spend less time in the workforce and earn less while they are in the workforce. Research shows that women are more likely to take time off to care for children and superannuation is not a mandatory requirement for parental or carers leave. Women also have a higher life expectancy meaning they may require more savings compared to their male counterparts.
While the gap is slowly closing, there are some strategies and superannuation hacks that women can start to implement to help them save more now in preparation for the future.
Personal contributions
Contributing extra payments to your super is one of the easiest ways to boost your super over time, and protect yourself in the long run. Personal contributions to your superannuation now will allow your retirement savings to grow at a faster rate, benefiting you in the long run and you’ll pay less tax!
The Moneysmart superannuation calculator is a great tool to help you determine how much extra you may wish to contribute to achieve your goals. There are limits on what you can contribute after-tax so be sure to check the ATO website to see if you are eligible.
Salary Sacrifice
Salary sacrifice contributions are another way to grow your super, and involve setting up extra payments through your employer. Similar to personal deductible contributions, salary sacrifice is taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate. Your extra contributions will compound over time, so you can retire with peace of mind knowing that you are in a strong financial position.
Superannuation Co-Contribution
Superannuation co-contribution if you are eligible is another way to boost your super.
If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500. The amount of government co-contribution you receive depends on your income and how much you contribute.
Share the load with your partner
If you have a partner or spouse, they can also deposit pre-tax money into your super fund by splitting some of their contributions. This can help to close the gap between a high-income earner and a low-income earner.
Get support from a financial planner
Superannuation can be an overwhelming topic and one that you don’t want to get wrong. If you are looking for advice to help guide your superannuation strategy, we recommend speaking with a Financial Planner who will be able to provide recommendations based on your unique financial circumstances.
Chat with the team at APS Financial Planning.
Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.
Paul has over 25 years experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with an 11-year-old daughter and enjoys spending time with family and friends. Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.