Most women realise that they won’t have as much superannuation as men when they are in retirement, regardless of their marital status and whether they have children or not. Statistics released by the Australian Government in 2018 declared that on average, women have nearly 40% less super than men at retirement, although the gap has narrowed slightly in the past year.

When you add that to the fact that on average, women tend to live longer than men, it makes a woman’s financial situation in retirement, quite precarious. Maybe you have seen in the news recently that an increasing number of older women are finding it difficult to manage financially, and in fact, many are becoming homeless? Why is this happening?

Why do women have less superannuation than men?

Whether or not you live well in retirement, generally comes down to how much superannuation you have in your account. If you need to rely solely on the retirement pension, then even if you own your home outright, your lifestyle will still begin to suffer – because the pension isn’t a large amount of money.

This leaves you will using your super as a backstop to supplement the pension and if you rent, then you will be in an even more difficult position. The problem is that women who take maternity leave don’t accrue as much super as men, and when they return to work part-time, they once again lose out on employee super contributions (because they earn less part-time).

The fact that many women are not paid as much as men in a similar career only adds to the issue. The result being, that women have less super than men when they retire.

How can women make up this loss in super?

The best solution is to pay additional voluntary contributions every week, as early as possible. For example, if you pay an extra $50 into your super every week, this can make up for the loss if you return to work part-time after starting a family. If you don’t start a family, then these extra payments will add up to a nice payout when you retire.

If you don’t return to work after having a baby or return only part-time, your super will suffer from lower contributions for many years (until you work full-time again), but at this point you may be able to take advantage of the low income super contributions (currently $500 if you earn $37,000 or less a year). Also, if your spouse decides to pay into your fund as well as their own, then he or she will receive tax off-sets.

Of course, as far as your super is concerned, returning to work early and working full-time is the ideal course of action, but this isn’t an option for many mums.

Also, remember that if you divorce, you may be entitled to some of your spouse’s super as it’s considered a shared asset of the marriage. In this instance, you need to obtain legal advice, because you will likely need all the super you can get when you retire. Don’t just leave it to a handshake with your ex, instead take it to court and ensure that your financial future is secured.

If you are concerned that your super won’t be enough when you retire, even if you are in your 20s, 30s, 40s or 50s right now, call me (Amanda McCall) on 07 3356 6929 or book your appointment online.

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