Super + Women = SuperWomen!
Superannuation is a topic which for most of us is too complicated, too confusing and too boring.
Unfortunately it is important.
It’s also an area that women traditionally get the raw end of the deal compared to men.
Here’s why (broad brush):
1. Women have a longer life expectancy than men.
2. Women take more career breaks than men over their life (either to have children and/or to be the primary carer of children).
3. Women are generally the primary carer of children when they are older (the child care and school years) – so they work less hours then their partner.
4. Women traditionally earn less than men doing the same tasks (though this is changing as it should).
5. Lots of women pursue work in micro and small business and don’t factor in super contributions.
These five reasons are the main explanations for why Superannuation nest eggs for women are less than men.
So, what is Superannuation?
I consider it a nest egg for retirement which has a number of tax concessions to make it attractive. It also has a number of rules to prevent it being exploited or rorted.
It is possible to have a nest egg of savings outside of Superannuation (for instance, equity in a property). For the sake of the exercise I’ll just pay attention to Superannuation itself.
There are no silver bullets to reduce the Superannuation gap between men and women. Legislation requiring extra Superannuation for female employees will most likely be counter-productive as employers will discriminate against employing women.
My tips for maximising your super are as follows:
1. Develop a nest egg plan for yourself and your family.
In my opinion, it’s ok for those plans to include options for developing a nest egg within the Superannuation system by regular contributions as a small business owner and outside of it, for example; increasing repayments on an investment property loan.
2. Consider your life stage and retirement goals.
For Superannuation policies there are only a few variables to grow your balance/wealth to where it needs to be:
A. The amount you contribute per year (there are contribution limits though).
B. How long you have to contribute before you start drawing from your balance.
C. The performance of your superannuation policy. Look at 1 year, the 3 year average and the 5 year average to get a sense of volatility of returns.
D. Review management fees and other costs charged by your policy. The lower the better.
3. If you are a smaller business, seek advice on any contribution you can make prior to end of financial year.
If you need help seek advice. There is no substitute for self-education and asking for guidance where required.