But women face unique challenges when it comes to retirement savings. Lower pay, time out of the workforce to raise children, or running a single-parent household, can make it challenging to build a reasonable amount of super. However, some simple strategies make it possible for women to overcome these hurdles.
Superannuation is a very tax-effective way to save for retirement. Your super fund pays a low rate of tax on contributions and investment earnings while you grow your nest egg. From age 60, you can withdraw your super tax-free.
Without super, many women must rely on the Age pension in their senior years. But the age pension is designed as a safety net and won’t provide you with a comfortable life.
Taking time off paid work (e.g. to have a baby or care for someone) or working part time can impact your super.
Your employer should be making super contributions on your behalf. These contributions will be equivalent to 9.5% of your salary or wages.
If you haven’t given your employer instructions about the super fund of your choice, it’s likely the contributions are paid into a MySuper fund your employer has chosen. This may not be the sort of fund you would prefer.
By law, you can normally choose your own fund and have your employer’s contributions paid into that fund. If you have several super funds, it’s a good idea to roll over or consolidate your super into your preferred fund. This will save you extra administration fees and make it easier to keep track of your super.
To choose a super fund, look at all the fees charged and the long-term average returns of the investment option you are comfortable with. Don’t base your choice solely on past investment returns, as past performance may not be a reliable indicator of future performance.
When choosing a fund also consider the insurance it provides and the level of cover you require. For more information see insurance through super.
There are a number of ways to build your super. You cannot normally access your super before you retire, so only contribute money you can afford to set aside.