Superannuation: Why Super May Not Be So Super For Women.
When used correctly, Super can be really Super – not new pair of shoes super but super as in ‘I have now stopped work and therefore have no income but I have money to live on for the rest of my life’ Super. However, women, in particular, are facing a variety of factors that have a negative impact when it comes to their superannuation and saving for retirement.
The balance of your superannuation fund is often the largest asset you will own besides your own home and with our ever-expanding to-do lists and juggling work and home and well… life, it slips further down the list of something we’ll get to “one day”. The thing is, when it comes to your super, the earlier the better rules apply and you absolutely have to be “in it to win it” which poses some female-specific issues of Super being not quite so Super when it comes to women and their wealth:
The working landscape has shifted significantly to allow for flexible hours and part-time positions which has working women everywhere putting down their prosecco to applaud this welcome change – allowing us to spend less time at work and more time at home. However, the consequence is that if we are working less, we are earning less which means less is going into our super accounts and the end balance is, well, less (see the theme here?). As a result, the reduced funds that are available once it comes time to stop work may not be sufficient to support you and could result in you having to work for longer.
According to WGEA, women get paid on average 14% less than men for the equivalent full-time job. Cumulating years of underpayment results in years of reduced super contributions and therefore lower super balances than our male counterparts. WGEA states that women retire on 47% less than men but live on average 5 years longer. When negotiating pay, think not only of the immediate funds going into your bank account but also the contribution that will be made to your super and the long term benefits of having money invested, earning returns, and growing for your retirement.
If you’re a mom or primary carer for someone else, then you may have had a gap in employment (often multiple times). No pay means no super contributions, missing out on years of super payments that would otherwise be accumulating and earning you returns to boost your super balance. These gaps in contributions mean that your super balance is relying only on the capital already in the fund and the returns it is generating. If you have high fees or insurance premiums being deducted, it could mean your Super may plateau for a few years or even go backwards!
Changing roles often to accommodate part-time needs or returning to a different employer after an employment break will result in Super accounts being open by each employer unless you have given them the details of an existing account. If you have not consolidated your Super accounts but left them open, each will continue to have fees deducted regardless of whether they are being contributed to or not. Accounts may also easily be “lost” if a name change has occurred via marriage and details have not been kept up to date – for some people changing your Super details is not the primary focus on your honeymoon! (Who knew?)
According to a Fidelity report in 2020, men are twice as likely to seek financial advice than women. Furthermore, if you are looking for a female adviser, women make up only around 20% of Financial Advisers in Australia. By not seeking professional advice on superannuation (Dr. Google doesn’t count) fees are going unchecked, investments may not be in line with risk appetite and you may not be aware whether you are on track for a self-funded retirement or will have to rely on the old-age pension.
So, what can you do? There are plenty of Government initiatives available for you to “catch up” and boost your balance so you do not have to rely on the aged pension during retirement. Tax-advantaged strategies mean you can increase your super balance and also reduce the amount of tax you pay. Yes, really!
To review your super position, understand the options available, and discover how personal financial advice can help you get on track with your super – book in a chat with me today (prosecco supplied).