5 tips for self-employed women to get super sorted

by Verve

Being self employed can be liberating, but the idea of retiring can often hang above the head of a self-employed woman like a dark cloud. As any small business owner knows, it’s not always easy finding the money and making the decision to contribute to super or long term retirement savings.

At Verve, we regularly speak to business women who are juggling their immediate cash flow concerns with long time retirement saving needs and not sure how to prioritise both.

Australia’s superannuation system is linked to paid work, so it naturally disadvantages people who take significant time out of the paid workforce to care for family members or work flexibly (think: women).

The average Australian woman retires with around 35 percent of the super of the average man. For women aged in their 60s, the average super balance for wage and salary earners is $175,000 – double the average balance of $83,000 for women who run their own business.

According to Kate Carnell, the Small Business Ombuds(wo)man, as women business owners tend to juggle work and other family responsibilities including care, they are more likely to own smaller businesses which are less likely to be sold to fund retirement.

The system clearly needs to change to support all Australian women to be able to retire comfortably without being reliant on their partner.

The good news is that most working women can take steps to actively grow their super balance while they’re still working. There can also be some great tax advantages for contributing to super to boost retirement savings.

Here are Verve’s five hot tips to power your retirement savings:

1. Know what you will need in retirement and make a plan

There are different ways to calculate how much you will need to save to live comfortably in retirement. As a rough guide, the Association of Superannuation Funds of Australia (ASFA), estimates that, as at December 2022, single woman will need around $49,462 per year to live comfortably.

Once you have an idea of what you might need, check out how you’re tracking in the ASIC Money Smart Retirement Planner Calculator. This will give you an indication as to whether you are on track or need to take action to boost your retirement savings.

You can also access Verve’s free coaching video on ‘Supercharging you Super’ to learn more about how to understand your needs and set your plan.

2. Make the most of superannuation tax benefits

Contributing to super may also provide tax savings today.

If you’re self employed, you can claim an annual tax deduction for up to $27,500 in “concessional” (before-tax) super contributions. Concessional contributions are taxed at 15 percent within your fund. If this is less than your personal tax rate, adding to your super could be a very tax-friendly way to save for the future.

That said, if you are a low to middle income earner, claiming all your super contributions pre tax may result in you missing out on the Government’s co-contribution scheme.

It pays to have a good read of the ATO website and if you need further clarity, speak to your financial adviser. If you’re thinking about claiming a tax deduction for your contribution in a particular financial year, it needs to be made before 30 June.

3. Choose the right superfund for you and set up your contributions properly

Before you start making contributions, you need to choose a super fund. This is an important decision and can have a significant impact on your retirement nest egg and the companies and industries your super is invested in.

Each fund offers different investment options, benefits and charges different fees. Funds also apply different ethics to how they invest, some funds apply no ethical screening while others screen out industries like: gambling; tobacco; armaments and weapons of war; animal testing and cruelty; fossil fuel projects and more.

If you can’t find information about the ethics of a fund upfront on their website, then they’re most likely not investing your money ethically.

It’s important that you notify your fund before claiming a tax deduction. You should be able to find all the information and the relevant form on your super funds website. Any good superfund will be able to support you to set up your contributions.

4. Manage cash flow through smaller, regular payments

The powers of compound interest mean that even small contributions to super can make a big impact over the long term.

As a self-employed woman, you may find it easier on cash flow to make small, recurring contributions.

An easy way to grow your super effortlessly may be to set up regular, automatic payments to your fund. All you have to do is decide on an amount you can comfortably contribute to your super on a regular basis.

Additional reading: The trouble with SME owners and superannuation

5. Help to change structural inequalities of the super system

Take a minute to visit the Parliament of Australia website and search for your local MP or Senator, look up their contact details and ask them what they’re doing to help close the retirement savings gap between men and women.

No matter who you are, improving the financial future of Australian women will provide benefits to all – so it’s absolutely worth demanding change from our politicians.

Learn more about how to supercharge your Super in the Money & Mindset Program

This blog is published by Verve Superannuation Pty Ltd (ABN 65 628 675 169, AFS Representative No. 001268903), which is a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956, AFSL 238184), as the Sub-Promoter of Verve Super. 

Verve Superannuation Pty Ltd and True Oak Investments Ltd are not licensed to provide personal financial advice. The information contained in this blog, including any financial guidance, is general in nature. You should consider seeking independent legal, financial, taxation or other advice to ensure that your financial decisions are suited to your unique circumstances.

You should read the Product Disclosure StatementAdditional Information BookletInsurance GuideTarget Market Determination and Financial Services Guide before making a decision to acquire, hold or continue to hold an interest in Verve Super. When considering financial returns, past performance is not indicative of future performance.

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