It’s no secret that women have a longer life expectancy than men. Here in Australia, women live five years longer on average. But shockingly, the gendered wage gap, and time out from the workforce to care for children and elderly parents (something often borne more by women than men) means women will retire with 47% less superannuation than their male counterparts.
Many women realise all too late that what’s in their super just isn’t enough for a comfortable retirement. But it doesn’t have to be this way, and you can start getting your super on track today. Here are five quick and easy ‘superpower’ habits you can start right now that will help you prepare for your retirement.
1. Make your balance your business
Unless you’re close to retirement age and staring down the barrel of what life will be like living off your superannuation savings, you probably have no idea what the current balance of your account is. But you really should. After all, what your employer contributes towards your super each pay cheque is really just another part of your earnings. And if you didn’t get what you were owed in any other day-to-day transaction, you’d probably make some noise about it. In a recent study by RMIT, 80% of women surveyed rated providing for their family’s daily needs as a top financial priority. However, having a comfortable retirement was only a priority for 50% of female participants, proving that for many women, the daily grind can often eclipse longer term planning. Start by finding out your balance today and set a reminder to check it every quarter. Most funds have an app that will make checking your balance even easier from your phone. And from here you can also review the fees you’re paying, and any insurance coverage. Funds can charge fees for many things, such as administration, switching investment options, or even making a transaction (including a contribution). If you’re uncertain about a fee or aren’t entirely satisfied about having to pay it, call your fund to and ask how you might be able to minimise these charges to your account, or switch to a different fund.
2. Crunch the numbers
Ask yourself three simple questions:
- Ideally, at what age would I like to retire?
- How much do I need to retire comfortably?
- Based on my current super balance, what do I need to do in order to get there and how am I going to do it?
Using the superannuation and retirement calculators on ASIC’s MoneySmart page, you can work out how much super you’ll have when you retire, how fees affect your final payout, the type of contribution that will give your balance the biggest boost, and much more. Having a clear objective will then help you break down into bitesize pieces the steps you need to take. And make sure you review your progress annually.
3. Get on the information superhighway
A 2017 study found that 45% of young women don’t know the risk profile of their super funds, a mindset which could be costing them hundreds of thousands of dollars over their entire working lives. A risk profile means the investment strategy and mix of assests that the fund invests in. A more conservative risk profile is more stable, but will likely result in lower returns. Aggressive risk profiles offer potentially very high growth for those who are willing to accept significant risk. When you get right down to it, knowledge is power. That’s why it’s important to know whether the risk profile you’ve chosen – be it aggressive, moderate, or conservative – is appropriate for your current life stage, financial situation, and desired retirement age. And these are all variables that will change regularly in the decades leading up to retirement, so you should also adjust your risk profile accordingly as you move through different life stages and circumstances. Above all, educate yourself on your super fund and your current mix of asset classes (which are really just different types of investments and might include shares, property, fixed interest, and cash). Find out whether greater diversification of your asset classes will improve your desired outcomes. Then learn what the optimum approach is for you right now and act on it.
4. Become an automatic fanatic
Super should not be something that you just ‘set and forget.’ But, at the end of the day, you’re only human. Do yourself a favour and automate some of your earnings by making voluntary contributions to your fund, either pre-tax (also known as concessional) or after-tax (non-concessional). Time is money: through the magic of compound interest, even salary sacrificing a small amount on a regular basis will make a big difference over the years leading up to your eventual exit from the workforce. Educate yourself about the tax implications for salary sacrificing before you take the plunge.
5. Host a super size lunch
Chances are, you were taught from an early age that it isn’t polite to talk about money. No surprises then that we have such a hard time confronting the issue, even when it’s just between friends. In order to reclaim power over your super, spark a conversation about it with others. Maybe start with a few trusted friends. Share with each other the current ‘size’ of your super funds. Swap tips about growing your retirement savings. The more you talk about it, the more visible it becomes, and the less forgotten or overwhelming.
Now go take on the world, SUPERwoman.