By AMY STOCKWELL.
A recent study has shown that, on average, women have little more than half the superannuation of men at retirement age – which means that many Australian women could run the risk of a very basic lifestyle later in life.
That’s something you’ve probably heard before.
Now, we could get grim about it. We could panic about it. We could delude ourselves that isn’t relevant to us. We could hide under the doona and accept that a financially stressful retirement is inevitable.
Just as an FYI, you should know that this post is sponsored by Australian Super. But all opinions expressed by the author are 100% authentic and written in their own words.
Or we could do something about it.
Want to be a Superwoman? It’s not tricky. In fact, despite its reputation as being difficult and dull, very little about superannuation is impossibly complex. It’s easier than you think – and turning your mind to it will not only make your future more secure, it will also make you feel more organised and empowered.
Firstly, a quick run-through on why women are retiring with less in their superannuation accounts:
As a woman, you’re looking at a long life. A 20 year old woman today can expect to live to around 94* and retire at around age 76. This means that you could be living in retirement for about twenty years.
As a woman, you’re also more likely to be paid less than your male counterparts. On average, women are paid almost 20 cents in the dollar less than men (outrageous, but true). The superannuation contribution that your employer makes on your behalf is calculated as a percentage of your salary. In short, the less salary you earn, the less super goes into your account.
Finally, women often have disrupted work patterns – whether it is raising children, caring for elderly relatives, or working part-time – less time in the paid work force, means that your employer makes fewer superannuation contributions on your behalf. Less time in the workforce means less money in your super account – and it could be a lot less money by the time you reach retirement.
This is especially the case for women who are often the ones who take time away from paid work to raise children.
Example 1: let’s say that you and your bestie are both 25 years-old and both earn $60,000pa. If you both work continuously, you can expect your super to reach around $335,000. But if you decide to take a break from work, maybe three years to have children, and then you work part-time for the next 15 years, you’re looking at retiring with $93,000 less than your friend.**
That’s right – take time for child-rearing and you might find yourself less almost a hundred thousand dollars which is potentially going to have a big impact on your likelihood of a comfortable retirement.
Top Comments
The idea of pre-funding your super before your absence is even better than the author suggests. By adding the extra $25/week for, say, 10 years prior to having children you allow that money to compound while aren't working. You actually end up with more money at retirement than if you wait until returning to work to begin the additional contributions.
Because my Mum took time off from her Career when I was born, and when dad was posted, my father salary sacrificed in his last few years of work (when my mum was back into her career and they lived on her wage) into my mother's super, so that they could retire on the same self funded pension...
There are a whole lot of loop holes and interesting things people could and SHOULD look into and everything will change with the new government so Keep YOUR eyes on the prize (your enjoyable retirement)
Those who are coming close to retirement age need to talk to a financial planner about salary sacrifice into super, drawing a transition to retirement pension, and rolling most of it BACK IN AGAIN (some tax thing) I don't understand it all, but some of the things you can do are so complicated that half the finance people don't know about it!!
Do your reading - be informed - don't say you didn't know!