On average there’s still a considerable gap between men and women when it comes to retirement investments. With statistics suggesting that more than 75% of the Travel Agency workforce is female, we look at some reasons why and suggest some tips to help women bridge the gap.
Considering women live longer than men on average (1), it’s important for women to have enough money invested for their own retirement. However, statistics show the average males superannuation balance is nearly twice the size of the average females.
On average, women earn less money than men
Women are increasingly moving towards careers in small business with figures showing that 31% of small business owners or managers were women (5). With over 2 million small businesses in Australia, or 97% of all Australian businesses, this translates to a large representation of the female workforce (6).
The majority of Australian small businesses (63%) are sole traders (7) and since sole traders generally aren’t required to make superannuation guarantee (SG) payments for themselves (8), this means women who are self-employed or run small businesses may not be making regular contributions to their super, only reinforcing the potential gap women in this position could face in retirement.
These factors and others all combine to contribute to a considerable wealth gap in retirement – with an overall gender difference in average superannuation balances of some 44.3%.9 Fortunately, there are things women can start to do now to help them be financially better off in retirement.
1. Salary sacrifice
If your employer offers the option to salary sacrifice, you can ask them to allocate a portion of your before-tax wage as an extra contribution to super. Salary sacrifice contributions are only taxed at 15%, which may be less than your normal tax rate, so salary sacrificing could be a way to build your super balance and reduce your taxable income at the same time.
2. Make non-concessional (or after-tax) contributions
If you have spare cash on hand, an inheritance, a bonus you may be able to contribute this to your super. You can make after-tax contributions to your super account generally of up to $100,000 per financial year, or even up to $300,000 depending on your age & super balance (10).
3. Spouse contributions
Where you are not working or are on a low income your spouse can contribute to your super fund from their after tax earnings, potentially entitling them to a tax offset of up to $540. This could mean your spouse saves on tax today while helping you to grow savings for your retirement.
4. Government co-contribution
If your salary is below $51,813 in the 2017-18 financial year, you may be eligible for the government co-contribution (up to $500). While you will need to make an after-tax personal contribution to be eligible, it’s a great way of saving and maximizing your superannuation benefits.
5. Take some simple steps & review your Super situation regularly
Improving your retirement savings can be as simple as consolidating multiple superannuation funds, reviewing the performance of your fund, adjusting how your money is invested or checking the cost and adequacy of your insurance within super.
Are you a Franchisee or Manager looking to review your teams Super, or simply need help understanding your own options? To maximize and protect your retirement savings make sure you engage with your superannuation & act sooner rather than later.
Phone: 02 8267 9927
Gow-Gates Financial Services Pty. Ltd (ABN 97 001 250 344) is an Authorised Representative of Apogee Financial Planning Limited (ABN 28 056 426 932) an Australian Financial Services Licensee, registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia Bank Limited group of companies (“NAB Group”).
Disclaimer: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.
1. Source: ABS Data (2013-2014)
2. Source: WGEA, Superannuation & gender pay gaps by age group - August 2016
3. Source: WGEA, Gender pay gap statistics – February 2017
4. Sources: WGEA, Superannuation & gender pay gaps by age group - August 2016 and Australian Bureau of Statistics Gender Indicators – August 2016
5. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
6. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
7. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
8. Australian Taxation Office – The self-employed
9. Overall gender difference is average superannuation balances refers to the average of 8 separate age bands across people 25-64 years of age. Source: WGEA, Superannuation & gender pay gaps by age group - August 2016
10. You can only use the bring forward option if you didn’t trigger it in either of the previous two financial years.