Superannuation is misunderstood

Relax, don't ghost your super. It wants to grow and support you

The word ‘superannuation’ is polarising. It gives insomnia to some people. Others drift off to sleep at the very idea of talking about it.

But talk about it, we must!

Superannuation should not be snoreworthy or anxiety-inducing. Superannuation is a beautiful tax-free gift we get for living and working in Australia.

Coming to grips with super and the other numbers you should know beyond your bank balance can be like walking a tightrope—lean too much one way, and you might fall into the abyss of over-saving (or catastrophising … my favourite trick); lean too little and you risk outliving your savings.

(I acknowledge that superannuation not a gift for women who take long breaks from employment, are self-employed or don’t have any at all … for these people, superannuation may give you insomnia.)

Women must particularly embrace superannuation, given how much less of it we will have than men (and how much longer we will live).

Superannuation is actually relatively EASY to supercharge - but more on that later.

There are three really simple things to come to grips with about your own relationship with superannuation:

1. ARE YOU ON TRACK?

The average superannuation balances for women are below. If you’re ahead of them, great! If not, then skip to part 3 so you can get moving.

Averages are not always helpful … but the numbers below can give you some perspective.

Women aged 40 to 44: $117,900 superannuation balance

Women aged 45 to 49: $153,200 superannuation balance

Women aged 50 to 54: $188,400 superannuation balance

Women aged 55 to 59: $231,200 superannuation balance

Women aged 60 to 64: $300,300 superannuation balance

Source: Deloitte Average Balances to 30 June 2024, excludes people with zero superannuation balance

2. WORK OUT HOW MUCH SUPER YOU WANT SAVED BY YOUR IDEAL RETIREMENT AGE

One source says singles need between $130,000 to $876,000. ASIC’s Moneysmart suggests $595,000 for a single. So which one is right?

None of them. And all of them.

Because here’s the reality:

• If you want to live comfortably without getting a government Age Pension, aim for as much as possible.

• If you want to rely on the Age Pension, you technically don’t need any super at all (but even then, you might want to have the $75,000 in super that ASFA recommends).

• If you fall somewhere in the middle, things get tricky. You, my dear, are the kind of woman who needs to get real about money (without turning into an insomniac).

All Australian citizens who hit the age of 67 are entitled to the Age Pension, which is a minimum of $29,754 a year. It is also indexed twice a year for inflation. Thanks government.

Most people rely on a combo of their super and the pension.

Some of us want to retire at 50, others at 60 and other at 70 or … never.

There’s even this thing called Peak Pension, where having LESS in super can give you MORE.

3. WORK OUT HOW MUCH SUPER IS RIGHT FOR YOU BY WHATEVER AGE WORKS FOR YOU

This is highly variable. So stick with me. Most of us can access the tax-free gift of super from the age of 60, but some of us will want to wait until 67 (the age we also qualify for the government Age Pension)

Women usually retire with less super than men. We also live longer. That’s a financial nightmare waiting to happen.

But not for you. Because you’re going to get ahead of this.

Here’s what you need to do right now … go through my little numbered list and see what sticks and resonates for you..

1. Find your latest super statement and then do the Australian Tax Office super health check.

2. Use the YourSuper comparison tool to compare different funds and basic super products.

3. Play around with retirement calculators to think about which scenarios work for you - the Mercer Retirement Calculator is pretty fancy, but the basic MoneySmart superannuation calculator is a good starting place. The MoneySmart retirement planner helps work out what type of income you might get.

4. Decide whether you want to boost your superannuation - salary sacrifice is the best way to do this for most everyday employed types!

5. Make an appointment with your super fund to get more financial advice or education about your super (most funds do this for free).

I wonder if I’m that boring person who leaves people nodding politely but they actually want to run a mile … screaming. So please answer the poll above to let me know!