- 18% of self-employed women interviewed say they have no super
- 19% of self-employed women interviewed are relying on the pension in retirement
- 32% of stay at home mums say they have no super or don’t know if they do
- 35% of stay at home mums fear being financially dependent on family and friends.
New data from BT Financial Group suggests that self-employed women could face an uncertain life in retirement. With no employer to make contributions and no obligation to pay themselves super they risk trailing other women in the paid workforce in planning for their financial future.
The BT survey of 4450 men and women across Australia indicates that self-employed women could be several paces behind their employed sisters, with 18 per cent of those interviewed having no super, claiming they had other plans to support their retirement or they’d find a solution when they got there. Only 5 per cent of working women in the same survey claim to have no super fund.
When it comes to stay-at-home mums, more than a third said they feared being reliant on friends and family for financial support in their old age. 64 per cent of stay home mums said they didn’t know how much money they’d need to live comfortably in retirement – 50 per cent said it was too complicated or they hadn’t thought about it and the other 14 per cent didn’t know where to find out.
Close to 20 per cent of self-employed women interviewed said they were relying on the pension in retirement, a figure twice that of employed women in this survey, while nearly 10 per cent intend to sell the family home to fund their life after work.
BT General Manager Superannuation Melinda Howes says while women’s superannuation balances are known to be well below men’s, self-employed women risked lagging even further behind.
“The challenges that women face in accumulating an adequate pool of retirement savings are wellknown,” said Ms Howes.
“Many take time out of the workforce to look after kids or other family, bringing their contributions to a halt. This is compounded by the wage gap that sees women paid 18 per cent less on average than their male colleagues.”
“For women who run their own business, the risk of being poor in retirement runs even higher. With no obligation to pay themselves super and faced with competing demands on their household budget, many simply cannot or do not put away the savings they need for a comfortable retirement.”
Ms Howes said that some self-employed contractors may be missing out on superannuation payments to which they are entitled.
“A hirer is required to make superannuation payments to contractors if they are paid wholly for personal labour and skills, perform the contract work personally and are paid for hours worked rather than to achieve a result,” said Ms Howes.
“If you think that the jobs you are performing in your business fit this description, then check with the ATO or your superannuation fund and find out if you are missing out on superannuation payments,” said Ms Howes.
Looking towards retirement, only 38 per cent of self-employed women interviewed expected to stop work before the age of 65 while 47 per cent were expecting to retire after 65 or never.
“Fortunately there are steps you can take to help build your retirement savings and safeguard your financial future. For example, you might want to consider putting your tax return or bonus into your super every second or third year. The trade-off of not spoiling yourself in one year could pay off with many years of better income once you stop working.”
Interestingly, many of the self-employed women interviewed have wholeheartedly embraced selfmanaged super with a 17 per cent take-up amongst this group.
“Many self-employed enjoy having control over their financial affairs, the same way they enjoy running their own business. This is where an SMSF may be a good solution, as it gives you control over your retirement savings, whilst also making sure you lock money away for those precious post-work years,” Ms Howes concluded.
Seven Super Tips for Women
1. Get to know your super as well as you know your bank account
Most of us know our bank balance fairly intimately, and we would surely notice if our salary or wages weren’t paid on time. Make it a priority to get to know your super just as well. Check your balance to see how much you have saved for the retirement you want so far, and review your transaction history to make sure that your employer is paying on-time and the correct amount into your super account
2. Salary sacrifice an extra few dollars a week
For most people, superannuation is taxed at a concessional rate compared to their income. Contributing even just a few dollars extra a week could yield thousands of dollars in retirement. If weekly budgets are tight, then make yourself a rule to put away a portion of your windfall payments like your tax return or bonus each year.
3. Consider putting all your super in one place
If you’ve had several jobs you might have lots of super accounts with small balances being eaten away by fees. Most funds offer services that can track down your accounts for you, find your lost super, and help you roll it over into an active account. Just make sure you check the amount and the terms of the insurance you have through these accounts first, to ensure you don’t lose any valuable insurance cover that you need.
4. Check you’re not missing out on super you’re entitled to
If you’re a contractor, and many women in services sectors such as IT, book-keeping and real estate are, you might be missing out on compulsory super payments that you’re entitled to. Go to the ATO website which includes a tool that will help determine whether your clients should be making super payments for you.
5. Ask the hubby to lend a hand
If they can afford to, your partner can make ‘spouse payments’ into your account to top up your super. This not only helps your super balance, your spouse might also be eligible for a tax offset. Details at ato.gov.au
6. If you’ve split up, don’t forget to split your super
With relationship break downs comes the dividing of assets. For many people, superannuation will be the biggest asset they own. Make sure it is included in any discussions you have about splitting assets. A super account can be split and shared between you.
7. Seek out expert advice
The most common question people have about their super is whether or not they are on track to have enough money when they retire. Your super fund, or your financial planner, may be able to offer you an assessment of where you’re at, and what you need to do to get to where you want to be in retirement. Seek advice, and reap the rewards that come with expert planning.