How Women Can Optimise Superannuation For An Easier Retirement

August 23, 2022
Tom Momsen
Superannuation

Women need to be smart about their finances and optimise superannuation strategies if they want to have a comfortable retirement. With such a large gender gap in superannuation balances, women need to manage their superannuation to maximise their retirement to the fullest.

If planned correctly, there are many ways women can take advantage of superannuation to make retirement smoother and more comfortable. They need to start saving early and often, invest in the right products, and be mindful of their spending. With the proper knowledge and planning, comfortable retirement is within reach!

Let’s look at how exactly superannuation works for women and how you can capitalise on it.

Contents

What is Superannuation?

How Does Superannuation Work?

How Are Women Affected by Superannuation?

How Women Can Optimise Superannuation

Be a Super(annuation) Woman!

What is Superannuation?

Superannuation is a government-introduced strategy as is essentially an employer-sponsored retirement savings plan. In Australia, employers must contribute a pre-agreed percentage of their employee’s gross salary into a nominated superannuation fund on their employee’s behalf.

For the 2022/23 financial year, your employer is required to contribute at least 10.5% of your ordinary time earnings (OTE) into your superannuation. These funds can be used to provide an income stream or lump sum nest egg in retirement.

How Does Superannuation Work?

Your superannuation is held in a fund and invested into various assets, including shares, cash, and fixed interest according to your nominated superannuation investment option. It is important to remember that your money will be tied up in superannuation for a long time. Hence, it is common for superannuation to be invested in a growth fund designed to provide you with the highest possible return in the long term.

Once Australian citizens reach their preservation age, they can access your super at any time.¹If you access your super before age 60, you will likely be subject to additional taxes.

How Are Women Affected by Superannuation?

While the government is introducing several changes to the superannuation system, there are some key ways that women are affected. On average, women have 23% less saved up for retirement than men.²

This could be due to many factors, such as women earning less than men, taking time out of the workforce to raise children, or living longer and therefore having to make their savings last longer.

Women are also more likely to retire earlier than men, which means that they have less time to grow their superannuation balances and may be forced to rely on the age pension or other forms of support in retirement.³

How Women Can Optimise Superannuation

There are many ways that women can grow their superannuation balances including:

Manage your superannuation fund effectively. It’s essential to keep track of your super balance and ensure your investment and insurance options are still suitable for your needs.
Consolidate multiple super funds. If you have worked at multiple jobs, you likely have multiple super accounts. You can save money on fees by consolidating your super accounts into one quality superannuation account. This could save you thousands of dollars in fees over time.
Make additional contributions. You can make both concessional and non-concessional additional contributions to your superannuation (subject to eligibility). Use Moneysmart’s Super Contribution Optimiser to see how you can grow your super. ⁴
Start investing in your superannuation as early as possible. It is never too soon to start looking after your super, so the earlier you start making smart, informed financial decisions, the more opportunities you will have in retirement.
Consider taking more risk. Most super funds will allow you to choose your investment option and the choice you make could make a dramatic difference to your balance. Generally, with investments, higher risk = higher returns. Make sure you choose an investment mix that is suitable for your risk appetite.

Be a Super(annuation) Woman!

Superannuation comparisons by gender and how women can increase their superannuation nest egg are complex and sensitive issues. There are several factors to consider, including economic, social and cultural factors. While there is no one-size-fits-all solution, it is vital to grow your superannuation in the ways that you can so you can retire comfortably.

If you want to learn more about maximising your superannuation, Newcastle Financial Planning Group can help you. We offer tailored superannuation and wealth creation strategies so you can secure your future and live your best life. Call us or book online to secure your first appointment with us today and get started!

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