How to stop the 'motherhood penalty' from hindering your super
We love mums, and every mum deserves a happy, comfortable retirement.
But the unfortunate truth is that some Aussie mothers are struggling to boost their super account.
Here are some facts about mums and super, and some ways you can go about fixing the problems.
How are women’s super efforts affected by the ‘motherhood penalty’?
According to Super Guru, women have less money when they reach retirement than men.
- Men: $197,000
- Women: $105,000
Two factors that influence this superannuation gap are women having lower paid jobs than their male counterparts, and women raising children will see a 17% loss in lifetime wages, according to Diversity Council Australia.
Unfortunately, 90% of women will retire without enough savings for a comfortable lifestyle, and one-third will have no super at all, also according to Super Guru.
So what can be done about it? Here are our helpful tips.
Negotiate with your employer
Every Australian is entitled to superannuation guarantee (SG) contributions, whereby your employer will contribute 9.5% of your salary to your super account. This is a great way to save the bare minimum for most of us, but what if you have to take time off for child rearing?
Your employment contract more than likely outlines terms of maternity or parental leave, which would be worth reading. Many employers now offer competitive maternity leave benefits for employees, and some employers will continue to pay SG contributions even when you are on unpaid maternity leave
But not all employers offer such benefits. Find out the different maternity leave conditions in your industry and negotiate the conditions with your employer.
Baby Break for Virgin Super Plus members
Shop around for superannuation fund providers too, as these could offer unexpected boosts to your retirement pot. For example, Virgin Super Plus offers a Baby Break to members on maternity or paternity leave for up to 12 months. Virgin Super will waive administration fees for the period that you are on maternity or paternity leave. Conditions apply, so find out more about the Baby Break through Virgin Super.
Related: check out the following infographic on the Motherhood Penalty & Superannuation:
Consolidate your accounts
As we go through life and change jobs, many of us open, or have opened for them, multiple super accounts. Over time, these can become inactive or ‘lost’, but we may still pay the fees to keep them open.
To avoid paying fees on multiple accounts and to stay on top of your super strategy, you may wish to consolidate these accounts into a single one.
It may be worth reviewing your super provider as well, to see if another option is more suitable. Talk to us today to see if Virgin Super could fit your needs.
Spousal contributions
Your partner is able to contribute some of their after-tax earnings into your super account, ensuring you keep the savings ball rolling on your road to retirement. This may make you eligible for a tax offset of up to $540, too, providing you meet the requirements.
The Australian Tax Office’s website outlines these requirements in greater detail, and it’s worth researching to see if you could be saving on tax as well as building super.
Try to save more when possible
There are plenty of other opportunities to save money whilst raising a child, whether you have a reduced income or not. Budgeting remains one of the best ways to understand your spending and get in control of your finances, particularly when you have new mouths to feed.
You might even find room to add some pre-tax income to your super by way of Salary Sacrifice when you are back to work, helping to further fill your nest egg.
Related: 6 ways parents can save on a growing family.
What are your motherhood retirement saving techniques?