When Tammy Wynette sang “It's hard to be a woman”, she probably wasn't thinking of superannuation. But the fact is, women often face unique challenges when it comes to growing retirement savings. The good news is that there are simple steps women can take to bridge the super gap and build a decent nest egg of their own.
It's no secret that women, rather than men, often take time out of the workforce to raise a family. Women are also more likely to work in part-time or lower paid employment, and women, on average, earn lower wages compared to their male counterparts1.
The impact of all this, is that women tend to have far less in super than men.
Across all ages, women have an average of $54,916 in super compared to $98, 535 for men. Among women aged 60 to 64 – those nearest retirement age, the average super balance is $138,154 – around half the $292,510 average nest egg of men aged 60-642. One in three women retire with no super at all3.
The thing is, women on average enjoy longer life expectancy, so they need more super. A man aged around 65 for instance, could expect to live another 19.5 years (an expected age at death of 84.5 years) while the life expectancy of women aged 65 is about 22.3 years (an expected age at death of 87.3 years)4.
Fortunately, there are strategies women can take to grow their super savings. Let's see what's involved.
Gather your super in one account
Tax Office figures show two out of five Australians have more than one super fund5. Tracking down any lost or forgotten super balances and consolidating different super accounts into a single fund can save on fees and help you stay in touch with your super.
Your Mortgage Choice adviser can help you find any lost super savings, and identify the fund best suited to your needs to gather your super into a single account.
Look at ways to grow your super
If you're working, consider using salary sacrifice as a tax-friendly way to grow your nest egg using before-tax money. Even small regular contributions of $10 or $20 each week can make a significant difference to the value of your final nest egg.
Tax advantage of new tax breaks
Since 1 July 2017, you can claim a tax deduction for personal super contributions – up to a total of $25,000 annually. It's a tax break that was previously only available if less than 10% of your total income came from salary or wages. These days however, if you have a part-time job where the boss pays, say $15,000 annually into your super, and you're also running a business on the side, you may be able to claim a tax deduction for up to $10,000 worth of contributions made yourself.
Get your other half to come on board
Also since 1 July 2017, the upper income limit for the spouse super tax offset has increased. If you earn less than $40,000 annually (up from the previous threshold of $13,800), your spouse or partner could receive a tax saving of up to $540 for making a contribution to your super fund.
Keep a keen grip on super
Take an active interest in your super. A survey by industry body ASFA found women are typically not as engaged with their superannuation as men. Importantly, nearly one in three women said they need to know more about superannuation.
If you have any queries about how super works, or you'd like more information on ways to grow your super savings, call your local Mortgage Choice financial adviser to arrange a meeting.