Bring super into balance
31 August 2018
A chasm remains between the retiring super balances of men and women, where women are leaving the workforce with around 47% less super than men, according to the Association of Superannuation Funds of Australia (ASFA). There are however, some steps we can take to ensure we maximise what we have.
On average, women retire with around $150,000 less super than men. This is due to a range of reasons including the gender pay gap, the fact that more women than men take time out of work to raise children and the financial demands on those running a single-income household.
So what can you do to rectify the situation?
Whether you’re female or male, there are a number of ways to increase your super balance at retirement. Let’s take a look.
1. Talk to the females in your life
Make sure your female friends and family members are prepared to live the life they want in retirement by speaking to them about their super and sharing some of these tips with them.
2. Track lost super
There’s now around $18 billion in ‘lost’ super being held by the Australian Taxation Office and super funds. Could some of this be yours? See if you have lost track of some of your super over the years.
Around 40% of working Australians have more than one super fund, and are therefore paying more in fees. Consolidating your superannuation can reduce fees and the impact they have on your final balance.
4. Salary sacrifice
Speak to your payroll officer about salary sacrificing some of your income into your super each pay cycle. Through salary sacrifice, you can top up your superannuation guarantee contributions, up to the total concessional contributions cap of $25,000 a year. This leads to tax advantages because these contributions come from your pre-tax income, and you only pay 15% when they go into your super. Even putting as little as $10 a week into your super can make a big difference over the long term, through the power of compound interest.
5. After-tax contributions
If you reach your concessional contributions cap through salary sacrifice, or you want to invest some additional cash into your super, you can do so with after-tax contributions.
6. Government co-contribution
If you earn less than $36,813 a year and make an after-tax contribution (i.e. not a salary sacrifice payment to your super) of $1,000, the government will co-contribute $500. If you earn more than this amount, the co-contribution will reduce until it cuts out at $51,813.
7. Spouse contribution
If you earn less than $37,000 per annum, you might consider having your spouse make a contribution for you and they can claim a tax offset of $540.
8. Get advice
Financial advice tends to uncover ‘unknown knowns’, often resulting in you being in a better financial position over the long term.
Taking action now will help maximise your super for your retirement.
If you want to know more about building your super balance, you can make an appointment with one of our financial planners or call 1300 LGSUPER (1300 547 873).