I was reading an article the other day showing statistics that women on average will retire at age 65 with a superannuation balance of $112,000 whilst men on average will have a super balance of around $190,000.
Firstly, both of these balances are far too low to meet anyone’s retirement needs given that it is expected to cost around $50,000 per annum per couple to live comfortably in retirement.
So what can women do to increase their super balance?
1. Consolidate all super into one- this is essential as most super funds have a minimum monthly member fee. Multiple super, multiple fees.
2. Take advantage of the Federal government’s co-contribution scheme- anyone earning less than $31,920 per year should take advantage of the Federal government’s co-contribution scheme, whereby the government will add up to $1,000 to your super balance if you make the same contribution.
Recent Government announcements suggest that fewer Australians may be eligible for a co-contribution bonus in the 2012-2013 financial year and the reward may also be less. So act before 30 June 2012 to get your reward.
3. Receive a spouse contribution- if you earn less than $13,800 a year, your spouse or de facto can make a super contributions directly into your super fund and claim 18% of the first $3,000 contributed as a tax rebate (ie $540).
4. Super Split- spouse splitting enables your partner to transfer up to 85% of their pre-tax contributions for the financial year into your super account. The maximum he can split will be between $21,250 and $42,500 depending on their age.
5. Make sure your super is invested correctly- most people, especially in Industry Funds, leave their super in the default fund. Make sure you know where your super is invested because a 1 or 2 percent per annum increase in return will make a big difference at retirement.
Taking these actions may not eliminate the super gap between men and women but will definitely boost your super by the time you retire.
Information provided in this blog is general in nature and does not constitute financial advice. While I have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and we recommend you seek financial advice.
Stephen Buhlman is an Authorised Representative of Financial Services Partner Pty Ltd AFSL 237 590 ABN 15 089 512 587.