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Closing the super gap: 7 ways women can boost their super
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By MyBudget Editor

In what’s supposed to be an age of equality, the reality is that women are still retiring with significantly less super than men. But there are ways to show your super—and future self—some love without busting your budget.

Sisters, it’s time to think about your super. Before you let out a collective groan, it’s ok, we get it. With 1-0-1 other money issues competing for your time and resources (the mortgage, the car, your kids’ education and even the dog), super can be easy to put to the back of your mind.

After all, retirement probably feels a long way off and women are notorious for putting everybody else’s needs before their own. But aside from home ownership, super is most people’s biggest asset, and it deserves attention sooner rather than later, especially you want to kick up your heels in retirement.

What’s the super gap?

You’ve probably heard of the gender pay gap—the annoying reality that a man typically earns more for doing the same job as a woman. While the gap is slowly closing, it has a big knock-on effect when it comes to a woman’s super balance. Why? Because super contributions made by your employer are calculated as a percentage of your salary. In other words, the less you earn, the less super you receive.

But that’s only the start of the problem. The super gap is further magnified by the reality that women are more likely to work in lower paying jobs than men (think childcare, aged care, admin work, nursing, teaching), and are more likely to do flexible, part-time work so they can juggle unpaid duties, such as caring for their families. All-in-all, in the race towards a comfortable retirement, women face some steep hurdles.

How big is the super gap?

According to the Association of Superannuation Funds of Australia (ASFA), in 2019 one in three women didn’t have a super account and around one-quarter of women retired with no super at all. Of those that did have super, women aged between 60-64 retired with a median balance of $122,848, compared to $154,453 for men. Both men and women retiring in 2019 fell well short of $545,000 – the figure ASFA recommends for a comfortable retirement.

As this latest crop of retirees have only benefitted from compulsory super for part of their working lives, it’s useful to look at the average super balance for men and women of all ages to get a clearer picture of how far behind women really are. Australian Taxation Office (ATO) figures show that average super balances in 2016-17 were $146,421 for men and $114,350 for women. That’s a 28% difference.

Plan for retirement by boosting your super

So far, we’ve focused on the doom and the gloom—the uphill battle women face to fulfil the dream of sipping margaritas on a tropical beach (or whatever your retirement hopes may be!) But, thankfully, all is not lost. Think about giving your super some TLC in 2020 by following these four steps.

1. Get intimate with your super

If you get to know your super now, it’ll be less like having a blind date when retirement finally arrives. The first step is to find your account details, log in and check your current balance. You can see how this compares to other women (and men) in your age group here.

Now check that your employer is making regular contributions – at a least once a quarter – and that they’re contributing the right amount. Employer contributions should be at least 9.5% of your ‘ordinary time earnings’, though some employers pay more.

While you’re still working, your super is invested on your behalf to earn more money – and you can choose how it’s invested. Find out which investment option you’re in and check out how it’s performed over the past one, three and five years. Super Ratings compares more than 100 funds every year and allows you to compare three-year earnings across a range of investment options

While you’re at it, look at what you’re paying in fees and for insurance cover, both of which can eat into your balance. According to Super Ratings, the top 10 low-fee funds charged their members from $238 to $423 per annum based on a $50K balance.

If you’re concerned that your fees are too high or investment returns too low, speak to your super fund, accountant or financial planner about your options. It’s your right to move funds if you wish to.

2. Tuck and roll

If you’ve ever changed jobs, you might have multiple super accounts. A quick way to save money is to consolidate your accounts into one which will avoid duplicate account fees. Rolling multiple super balances together is quick and easy and your super fund can help.

Finally, do a lost super search through the ATO. It’s possible you’ve got super from previous jobs you’ve forgotten about – bonus! Once you locate any lost super, roll it into your current fund to get an instant balance boost.

3. Make small changes that generate a big difference

Now that you’re acquainted with your super, it’s time to make it grow. This basically comes down to making voluntary contributions into your account, above and beyond what your employer is contributing.

Look at your budget and work out what you can afford. If money is tight, don’t be discouraged. Even just $10 a week will add up thanks to the power of compound interest. In the resources section at the end of this article, you’ll find the ‘Small Change Big Savings Calculator’ which shows the effect of topping up your super—make sure you check it out.

If you’re wondering how to find spare cash in your budget, savings are often hiding in your spending habits. Where could you find an extra $10 a week? Could you cancel a subscription you’re not using? Bring your lunch to work? Sell some items you don’t need? Reduce your spending and channel the cash towards your super—your future self with thank you.

4. Decide how you want to contribute

There are a couple of options for voluntary contributions – the first is salary sacrificing. With salary sacrificing, you ask your employer to pay some of your before-tax salary into your super, usually on a regular basis, such as every pay. For many people, salary sacrificing is a double bonus because it gives their super a boost, while also lowering their taxable income.

Make sure you get advice from an accountant or tax professional to understand how it would work in your situation. If salary sacrificing is something you want to do, your payroll department can help you set it up.

If you’re not in a position to salary sacrifice, another option is to give your super a boost using a tax refund, work bonus or an inheritance. You can make a one-off, before-tax personal contribution to your super and then claim a tax deduction for the amount which reduces your taxable income. Your super fund can help you do this. Again, seek advice about your situation from an accountant or tax professional.

5. Get your spouse to chip in

They say ‘a man is not a financial plan,’ but super might be an exception to the rule. If you’re earning less than $40,000 a year or not working, your spouse can contribute after-tax money into your super and receive a tax break for doing so. If you earn over $40,000 a year, your spouse can still make contributions to your super, but they won’t receive a tax break. See the ATO website for updated details on spouse contributions.

6. Get a little help from Canberra

At the time of research, if you earn less than $52,697 before-tax and put some after-tax money into your super, the government will make co-contributions up to a maximum of $500. The amount of your co-contribution entitlement will depend on your income and how much you put into your super. You don't need to apply for the super co-contribution. When you lodge your tax return, the ATO will work out if you're eligible and pay it into your super account automatically.

7. Keep your eye on the horizon

Super funds and consumer groups are reported to be lobbying the government to allow joint super funds for married couples as a way of helping to overcome the gender income gap in retirement. Other proposed measures include removing the $450 per month minimum earning threshold for the employer super guarantee. It’s estimated that around 350,000 people earn no super because of this rule and that more than half are women.

One final thing

Remember to teach your daughters to pay attention to their super and retirement planning early, to help close the super gap once and for all!

Read more articles about setting yourself up for financial success or, for help with budgeting and achieving your financial goals, contact MyBudget on 1300 300 922 or enquire online.

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