Four tips for women to take control of their super
Faced with average lower earnings, possible time out from the workforce to raise children, and longer life expectancy, it can be a struggle for women to save enough money in their super.
Alison began her working life as a bank teller in Melbourne, then later re-trained and moved into marketing. While her involvement in the financial services sector led to a lifelong interest in property investment, her superannuation has suffered considerably along the way.
When she divorced and moved to Queensland with her teenage daughter, she was unable to find well-paid full-time employment and spent the next 20 years in a number of low-paid jobs. During this time, Alison accumulated a number of super accounts with different funds. “I knew that wasn’t going to be helpful down the track, so I moved everything into one fund,” she says.
Alison’s situation changed for the better when she found a full-time role as an events organiser, and her super balance started to grow. When that job ended, she moved to another full-time role, this time in the community services sector, where she has worked for the past eight years.
Alison keeps an eagle eye on her superannuation and its investments. “I’m interested to see the return and whether I should take any action. I also regularly check that work is paying my contributions,” she says. Years before, Alison had been working for a small business that folded and she discovered, too late, that her super hadn’t been paid. Despite years of low income and raising her daughter alone, Alison has maintained her focus on property and understanding the market to ensure that she didn’t ever have to rent.
“The sale of one house for a profit to get to the next house, has allowed me to live in my own home,” she says. “It would have been nice to make a reasonable profit to put back into super. But I’ve always tried to reduce my mortgage instead, because I won’t be able to afford a mortgage when I retire.” Given her time again, Alison says she’d have kept more focus on her super savings – topping them up with personal contributions along the way. “I don’t regret focusing on property but I realise that if I’d kept my super balance higher, I’d be in a better place today.”
More than 80% of women are retiring with inadequate savings to fund a comfortable retirement2. The Association of Superannuation Funds of Australia (ASFA) estimates that an individual needs around $545,000 to achieve a comfortable retirement.
But ASFA CEO, Dr Martin Fahy, says the latest figures available show that women are retiring with an average $123,642. “Homelessness Australia has identified older single women as one of the groups who are especially vulnerable to experiencing homelessness. Older single women may be forced out of the workforce early, have insufficient superannuation to fund the cost of living and face discrimination in the housing market,” he says.
It’s a cautionary tale, says financial adviser Amanda Cassar of Wealth Planning Partners. Life expectancy for women may be 84.6 years but that’s just the average. There are plenty who live well into their 90s, says Amanda. “A full aged pension for a single person is currently $23,824 and for a couple it’s $35,916 – that’s beyond a modest lifestyle,” she says.
It’s best to do what you can at this point to improve your position. Obviously keep working for as long as possible, cut your costs where you can and if there’s any money left over, no matter how small, make a contribution to your super. It’s also important to make sure you understand how your super is invested and whether it’s right for your stage of life1. Speak to your super fund or a financial adviser to find out.
Given her time again, Alison says she’d have kept more focus on her super savings.
1 Based on non-concessional contributions cap of $100,000 and concessional contribution cap of $25,000 for 2018-19 income year.
*Real name not used
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Celebrating International Women’s Day under the banner of #BalanceforBetter, we will be sharing inspiring stories of how women from different backgrounds and age groups have become more super savvy, demonstrating that it’s never too early or too late to take control of your retirement savings.