Sorting your super now can make a big difference to your retirement
Superannuation is boring, right? Retirement can seem a really long way off and many of us tend to either hope that we’ll somehow manage to acquire enough super along the way, or we’ll win the lotto in the meantime, and live a luxurious, stress free retirement. Sadly, neither scenario is incredibly likely!
No matter what your stage and age, take a few moments to stop and survey your super now, and with a few small changes you can help ensure you’ll have enough to fund your retirement (when you eventually get there!).
So, what is super?
Superannuation is a very tax-effective way to save for retirement.
- Your employer should make super contributions on your behalf, and these will be worth around 9.5% of your wage.
- Your super fund pays a low rate of tax on contributions and investment earnings while you grow your nest egg. From age 60, you can then withdraw your super tax-free, and use it to live on in your retirement.
- Without super, many women are forced to rely on the age pension in their senior years.
- In fact, one in three women retire with no super at all, and 77% of women have to rely on some form of age pension in retirement.
But the pension is designed as a safety net, and won’t provide for a comfortable retirement or perhaps the lifestyle that you are used to. So it’s essential to focus on growing your super.
Did you know? One in five women cite lack of time as the main reason they haven’t sorted their super.
Women and super
Around 90 per cent of women won’t have enough super to fund the lifestyle they want in retirement.
- In fact, the average woman’s superannuation account balance at retirement is around $90,000 less than for men.
- This is due to a number of factors – including the fact the women can sadly still earn less than men for equivalent jobs, and the fact that women are more likely to have a career break to raise children.
- Women also have a longer life expectancy, adding a further challenge to the amount of super they need to fund a comfortable retirement.
- Only 12% of women think their super will be enough for retirement, and half of all women don’t know how much they’ll need for a comfortable retirement.
Take a look at your super now – a few small changes now could make a massive difference in years to come!
Get it right from the start
If you’re just starting out in your working life, a few simple smart choices now will set yourself up for retirement.
- When you first start work and have financial freedom, it can seem like the money will always be there. But thinking about your future now means less to worry about later.
- Managing your super is as easy as making a few smart moves early on:
- Choose a fund for life – you’ll pay less in fees than if you constantly switch between funds as you change jobs
- Combine your super – don’t leave small balances in multiple accounts, each with its own fees and charges
- Provide your Tax File Number – this means you’ll pay less tax
Taking a break?
For many women, life with work and family is a juggling act. Women face many challenges in life and work, including:
- Taking time away from work to have a baby and care for children
- Cutting down your work hours due to family commitments
- Going through separation or divorce, or adjusting to a single income
Lower pay, time out of the workforce to raise children, and running a single-parent household can make it challenging for women to build a reasonable amount of super and save for retirement.
With the pressures of work and family, focusing on your super can easily be overlooked. However, some simple strategies make it possible for women to overcome these hurdles.
Try this career break super calculator to help you work out how working part-time or taking a break from paid work affects your super.
If you’re at the stage where the kids are leaving home and you’re looking towards retirement, it’s important to understand how much money you’ll need.
- Once you retire, you’ll need a regular income to live for around 20 years – and for women, most likely longer. Will you have enough?
- Use the Retirement Planner to work out how much income you are likely to have from super and the age pension when you retire.
Whatever stage you’re at – be sure your super fund is working for you
- If you haven’t chosen your own fund for your employer to pay your contributions into, they’ll be going into a fund your employer has chosen. This mightn’t be the best fund for you.
- You can normally choose your own fund. To help make your choice, look at the fees it charges and the sort of investments the fund makes. It’s important that you are comfortable with your super investment options.
- When choosing a fund also consider the insurance it provides and the level of cover you require. For more information see insurance through super.
Sometimes putting your eggs into one basket is a good idea!
If you have several super funds, it’s a good idea to roll over or consolidate your super into your preferred fund. This will save you the administration fees charged by any extra funds.
Take the time to track down lost super
- If you have ever held a part-time or casual job, or moved house, you could have superannuation invested in a fund that you’ve lost track of.
- You can use myGov to keep track of all your super and combine multiple super accounts into one.
- For more info on how this works, visit the ATO’s page on checking your super.
Superannuation is very important to the quality of your retirement. By taking a moment to ensure it’s working right for you now, you can make a big difference later in life.