Superannuation is one of the most important and efficient investments you can make. It is concessionally taxed, has flexibility with insurance and can provide added incentives when you contribute money.
But given that we generally earn less than men due to timeout of the workforce and unequal pay, many women face an uphill battle to grow their superannuation. In fact, half of all women aged 45 to 59 have $8,000 or less in their superannuation funds, compared to $31,000 for men. Given the ever-increasing cost of living, it is doubtful many women could retire anywhere near comfortably on their default amount they save in their super. So here are 10 simple steps that may help you increase your retirement savings.
1. Rollover and Save.
Multiple Super accounts usually equals multiple fees. Consolidating your superannuation into one account will make it easier for you to track your retirement savings.
2. Find your lost Super.
If you have changed jobs a few times, or had short term work contracts you may have Super accounts you did not know about. You may have moved house and lost track of your superannuation. To search for lost Super visit www.unclaimedsuper.com.au or call the tax office on 13 10 20.
3. Make Additional Contributions.
If you have some spare cash you may want to make after tax contributions to superannuation. Many of the superannuation funds have the option to set up a regular direct debit, Bpay or electronic funds transfer. Making additional contributions may give you access to the government co-contribution.
4. Salary Sacrifice into Super.
If you are currently working, you could talk to your employer about sacrificing some of your pre-tax income into Super. Salary sacrifice can have tax advantages as you may reduce the amount of income tax you pay. This is not for everyone so you should seek financial advice as to whether this would be beneficial to you.
5. Government Co-Contribution.
You may be eligible for a free boost to your superannuation. If you earn less than $61,919 and make a voluntary after-tax contributions to superannuation, the government could contribute up to $1,000 each financial year to your Super account. These figures may change as the Government may alter the amounts payable from 1st July 2012 (i.e. to be less generous). Like everything, conditions apply so you should seek financial advice. This is a great incentive and could give your superannuation a real boost.
6. Super Splitting.
You may be able to share part of the Super contributions you or your partner make each financial year. Most funds now have Super splitting available.
7. Tax Deductions.
Are you self employed? That is, do you earn less that 10% of your income from an employer? If so, you may be eligible to claim a tax deduction for any voluntary Super contributions you make. Be careful as contribution limits do apply.
8. Check your insurance.
You may be surprised to find that you have Death and Total and Permanent Disability insurance through your superannuation fund. Some superannuation policies also offer Income Protection insurance. This is often a cost-effective way to structure your insurances. Insurance is a vital part of your financial security and you should make sure you have enough cover to protect you and your family. Again, this is not relevant for everyone so you should seek financial advice as to whether this would be beneficial to you.
9. Make Investment Choice. Many of us do not make an active investment selection for our superannuation entitlements. You do have choice and you should make sure you are comfortable with how your retirement savings are invested. Do your research or seek advice.
10. Seek advice.
There is a common theme emerging through this article. Research your fund and make informed choices when it comes to superannuation as this can make a real difference come retirement time. Many of the superannuation providers can direct you to an aligned financial planner or alternatively, the internet has many great websites if you would like to do your own research.