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A woman’s superannuation won’t last a year in retirement

We look at how women can catch up on their superannuation in light of new research which highlights the extent of the shortfall in
November 4, 2018

What if I told you that your superannuation will barely last one year if you retire at age 65?

It’s a rather depressing thought but it’s a serious reality that many women face.

A recent report by AMP titled Super Shortage found that for the average Australian woman to live the retirement lifestyle they aspire to from age 65, her superannuation savings will barely last 12 months.

What’s more, with average life expectancy of Australians being 82.5 years old, that leaves 14.1 years where most people won’t have any superannuation at all to live off.

Recent data from the Australian Bureau of Statistics (ABS) as reported in the Financy Women’s Index shows the average woman’s lifetime superannuation balance is $101,700, which is 66 per cent of the average man’s at $153,000.

The findings are worrying as they reveal a big gap between expectation and reality.

Currently many women are saving much less in and out of superannuation, than what they actually need to live out their expected lifestyle in retirement.

But Dianne Charman financial adviser at AMP Financial Planning believes early planning goes a long way towards bridging the super shortage between the retirement you want and the one facing you.

Knowledge is power, so it’s essential to understand what, if any super shortage you have to be able to proactively plan for the future.”

Dianne recommends the following three strategies as a way to build super and address any shortfall you may have.

Salary Sacrifice

Using salary sacrifice to plough some of your before-tax annual income into superannuation if you’re under 65 can be useful as well.

Even if you’re over 65, you can make either before-tax or after-tax voluntary superannuation contributions up to the age of 74 whilst meeting the work test.

The obvious benefit to salary sacrifice is that it adds to your super balance, but it can also be an effective way to reduce your overall taxable income.

There are limits and a lot of rules on salary sacrifice, so it is important to seek financial advice before jumping into anything.

Employee Benefits

Pay attention to employee benefits where you work or at a company you’re considering taking a job at.

With increased awareness in Australia around the disparity between men and women’s super savings, more and more companies are offering superannuation payments to employees taking both paid and unpaid parental leave.

This is definitely a step in the right direction as it creates an opportunity for women to boost their savings by choosing to work for a more progressive company.

Ensure your personal information is up to date

Making changes to personal information on superannuation accounts is one of the many things new parents and in particular women face when they change their work schedule to raise a family.

It’s a tedious task but taking the time to make simple changes can have a massive impact on savings when it comes to fees.

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November 4, 2018
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