Imagine you just got your first job, and you’re ready to make enough money to support yourself. Retirement is the last thing on your mind, so you spend your entire salary on other things.

Soon enough, you reach middle age and realise that the balance in your super isn’t nearly what it should be. So what can you do to better plan for retirement?

Keep reading to learn how you can build your superannuation fund, even when you don’t earn as much as a man.

Reviewing the Super Gap

As of 2021, women in Australia earn about 13.4 percent less than men. Therefore, women working full-time earn roughly $242.20 less than men who work full-time.

A lower salary can make it hard for women to save and contribute money to a super. Fortunately, the gender pay gap is closing, but there are still problems that women have to face when saving for retirement.

For example, women typically take more time off for maternity leave. If a family needs someone to stay home full-time to care for their children, the woman is more likely to take on this role.

All of this results in women earning less over time as well as per year. And when women leave or take a break from the workforce, that also means losing out on superannuation contributions.

The average superannuation fund balance for women between ages 45 and 59 is less than $8,000. However, men in the same age group have saved about $31,000.

Women also receive a much smaller superannuation payout at about $37,000. Men receive a payout closer to $110,000.

What Can a Woman Do to Improve Retirement Prospects?

While retirement prospects look bleak for women in Australia, the problem doesn’t have to continue. Women of all ages can take steps to improve their retirement funds and prepare for the future.

Whether you just entered the workforce or are closer to retiring, you can bulk up your super. Then, you can retire comfortably despite the odds being against you.

Consider how you can increase your retirement savings, regardless of your age.

Young Adult Women

It can be easy to prioritise other expenses when you first start working full-time. You may have to pay for rent, utilities, food, and transportation.

However, now is the perfect time to start retirement planning and saving. Your superannuation fund uses compound interest, which is when you can earn interest on the amount that increases from earlier interest payments.

Combine that with contributing the maximum amount each year, and you can save plenty before you retire. Even waiting a few years can significantly reduce the amount of money you can save for retirement.

If you wait too long, you may need to contribute more per year to build your super. But because of the gender pay gap, you may have problems making enough.

Do Your Research

Another thing you can do to improve your retirement prospects is to research your super fund. You should figure out which super fund you have and learn as much about it as you can.

If you don’t know which super fund you have, you can log into your MyGov account. Then, you can go to ATO and click on Super. You can view the fund, and you can do your own research regarding that fund.

Then, you can compare other available super funds. If you find one that offers better interest or other terms, you can switch to it. You can also leave part of your super in the current fund to diversify your finances.

Negotiate Your Salary

The more you make from your salary, the more your employer has to contribute to your super. Employers have to contribute at least 9.5 per cent of your salary to your fund, and that ratio will increase in the future.

Even if you only increase your salary by a few hundred dollars, that means a few extra dollars in your super. Negotiating your salary now can also increase your future earnings.

Both of those factors can increase your super balance throughout your working life. Then, you won’t have to contribute as much of your pay to grow your super.

Take Advantage of Government Contributions

If you can’t negotiate your salary, you can look at government contributions. Australians making less than $52,697 per year can qualify for con-contributions from the Australian government.

When you file your tax return, the government will calculate the amount you can receive. Then, they will contribute that amount directly to your super without you having to do anything.

Australians who earn less than $37,000 can also qualify for a low-income superannuation tax offset (LISTO). You can get up to $500 per year, depending on how much you make.

Make More, Save More

As you start making more money, avoid the temptation of lifestyle inflation. Instead of spending more money on food or miscellaneous spending, put that extra money into your super.

Saving more for retirement now is especially crucial if you plan to take time off work to care for a future child. You can use your extra money now to prepare for your time away from work.

By planning ahead, you can minimise the amount of superannuation contributions you’ll lose. Then, you can improve your retirement finances well before you leave the workforce permanently.

Middle of Your Career

In the middle of your career, you may have lost out on savings if you had kids. Even if you took time to save more money before maternity leave, any time off from work can reduce your retirement savings.

When you go back to work, you may need to save more money than if you never took time off. The amount you need to save each year will depend on how much time you took away from work.

If you went back after maternity leave, you may not need to save as much as someone who left work to care for a child for years. Either way, put as much of your extra income into your super as possible so that you can better prepare for the future.

Pre-Tax Contributions

One excellent way to increase your super fund is with a salary sacrifice. You can ask your employer to put some money from your pre-tax pay into your superannuation fund.

The money you contribute will face the concessional super tax rate, which is about half that of your marginal tax rate. Doing this can be an excellent way to save money on your taxes now and increase your super fund for when you retire.

However, all of your contributions must stay under $25,000 for the year. The maximum applies to your contributions as well as the money your employer contributes.

Post-Tax Contributions

If you want to contribute even more money each year, you can make post-tax, or non-concessional, contributions. The government allows up to $100,000 in non-concessional contributions each year.

You will have to pay the taxes on these earnings now, but you can still use the money for your retirement savings. If you make more than enough money or if you and your spouse don’t need the money, you can save it.

Then, you can easily grow your super fund without needing to increase your salary or change other factors.

Women About to Retire

As you get close to retirement, you should still contribute to your super. You will be able to access your super between ages 56 and 60, and you can get the Age Pension once you reach 67 years old.

However, you may need to save a lot of money in a short time if your super has a low balance. Fortunately, you can take advantage of pre- and post-tax contributions.

You also have access to other options to increase your superannuation fund before retirement.

Sell Your Home

Another way to grow your super fund is to sell your home. If you’re able to downsize and move, you can take some of the profits from the sale and contribute to your superannuation fund.

You must own your home for at least 10 years and be at least 65 or older to be eligible. If you meet those requirements, you can put up to $300,000 into your retirement savings.

Contribution Carry Over

lIf you need to make up for a lot of time that you lost, you can carry contributions over to the next year. Each year, you can contribute up to $25,000, but that number doesn’t reset.

Perhaps you didn’t contribute anything last year to your super. This year, you could contribute up to $50,000 to your fund. And if you also didn’t contribute the year before last, you can add that $25,000 to your maximum.

That means you could contribute up to $75,000 in one year. You can adjust the numbers depending on how much you did contribute. So if you put away $10,000 during each of the two prior years, that gives you an extra $20,000 to contribute this year.

How Will You Build Your Superannuation Fund?

Many factors make it harder for women to build their super funds for retirement. From a lower starting salary to leaving the workforce to care for children, it can be difficult to put away money for the future.

Fortunately, women have multiple options to build a superannuation fund. Whether you use a salary sacrifice or get government contributions, you can have a healthy retirement.

Do you want to learn more to grow your super Contact us to learn how we can help.

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