Financial freedom – it’s something everyone wants. The comforting knowledge that you are financially secure and that you are able to choose the type of lifestyle you want to live, rather than feeling frustrated or lacking control of your future because you are concerned about money.
But for many women, financial freedom can be difficult to achieve. Unfortunately, we can’t hide from the fact that women are more likely to face financial inequality and that up to 40% of single, retired women experience economic insecurity in retirement.
There are significant hurdles to overcome, so no matter where you are in your life right now, it’s essential that you take control today and start preparing for the future.
The not-for-profit organisation Women in Super outlines a number of key statistics about women and finances. These include:
- Women currently retire with 47% less superannuation than men
- On average, women live five years longer than men
- 44% of women rely on their partner’s income as the main source of funds for retirement
- 8.5% of women between 65 and 74 still have a mortgage
- The average female salary is $44,000 (including part-time workers)
- Female graduates earn $5,000 less than male graduates in the same role
- Women spend on average five hours more per day caring for children than men.
There are many factors that contribute to these statistics. More women work part-time, women tend to earn less, and women take more time out of the workforce to care for children or other family members. And while it’s difficult to change these things in the short term, there are opportunities you can take to help create a better financial future.
Take control of super
The best place to start is with your superannuation. If you have had multiple jobs through your career, it’s quite possible that you have more than one superannuation account. Start by searching for unclaimed funds – you never know what you might find! Even if it’s just a few thousand dollars, it can benefit in the long term. Consolidating all your super into a single account can help improve your return by minimising fees and ensuring you’re not paying premiums for insurance cover across different accounts.
There are also numerous contribution strategies you can investigate. For example, if your income has decreased, you may be eligible for the super co-contribution. The ATO manages the co-contribution and outlines the details:
“If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500.
The amount of government co-contribution you receive depends on your income and how much you contribute.”
If you have a spouse, you could consider contributions splitting or spousal contributions to access potential tax offsets. We recommend discussing these equalising strategies with a professional, as you want to make sure they suit your personal financial position.
Besides superannuation, you can also support your financial future through investing. If you happen to have a financial windfall or build up some separate savings, it could be worthwhile engaging the services of a financial adviser to help you develop an investment portfolio.
This could be an appropriate choice if you have already retired and are unable to add to your super.
Ideally, it would be great if all women could start building their financial security from a young age. But regardless of your current life stage, it’s important to feel confident and that you have control over what lies before you… we urge you to take the time to review your situation and put a plan into action.