Women in Australia are generally more disadvantaged financially as compared to men. They earn lower average salaries, with a gap that amounts to $15,000 a year[i]. This contributes to the statistic that around 90% of women[ii] end up not having enough savings to live comfortably during their retirement.
The following tips aim to guide you in making financial decisions for yourself and for your household and help you achieve the life you envisage.
Smart Financial Advice for Women: 10 Tips
1. Secure a superannuation fund and watch its earning potential
Superannuation funds are taxed lower than other traditional investment products (maximum of 15%[iii]). In choosing a superannuation fund, make sure you have sufficient information about each type like:
- What is the superannuation fund invested in?
- What is the fund’s performance?
- Does the fund have an insurance component?
2. Consolidate your superannuation funds
Rolling over the superannuation funds you’ve accumulated from different jobs prevents you from being charged multiple fees. Managing only one super fund means paying only one set of fees and being able to keep better track of your money. When your funds are pooled together, your money works harder and has better earning potential which helps you grow your retirement fund. Prior to proceeding with a consolidation of your Superannuation accounts you should confirm that this will not affect your insurance cover as any cover held within the funds rolled over will be cancelled. See advice from a professional financial adviser before doing so.
3. Boost your superannuation funds with salary sacrifice
Contributing a part of your pre-tax income to your superannuation fund increases your retirement savings by reducing the income tax you need to pay. However, salary sacrifice does not work for everyone. Benefits of salary sacrifice usually depend on how much you earn and other personal circumstances.
4. Make sure you have insurance that covers the cost of everything you do
Most women usually get insurance to cover the amount they earn for themselves or for their families. However, remember that your insurance also needs to cover the things you don’t get paid for and the costs that come with them (e.g. medical bills, child care cost).
5. Use your superannuation to pay your insurance premiums
Paying your insurance premiums using your superannuation fund may provide you with the following benefits:
- Eligibility to purchase insurance from your superannuation fund using pre-tax dollars
- Not having to pay the premiums manually from your own pocket.
- Possibility of negotiating for a lower premium rate if you belong to a group or employer plan
6. Identify your financial goals
Your financial goals will set the direction and purpose of your financial activities and decisions. Before availing of any investment or insurance product, you should ask:
- What will you use the money for?
- What is the timeframe you’re working with?
- How much can you afford to invest?
- What level of risk are you comfortable with?
7. Spread your investment over different asset classes
By diversifying your investment, you reduce the risks associated with short-term investing and get more consistent overall returns. This will allow your high performing assets to offset the losses of the poor performing ones. Have a good mix of “defensive” assets (more secure investments) and “aggressive” assets (more volatile, higher risk).
8. Know how much you need to live a comfortable retirement and how you can access retirement income
It is said that a single person needs around $545,000 to retire comfortably. For couples, around $640,000[iv]. You’re probably concerned about how to reach these amounts by the time you retire. There are ways you can access retirement income that would help augment your retirement fund such as:
- Income stream from investments
- Account-based pension
- Age Pension
9. Be in control of how your wealth gets distributed with Estate Planning
Have peace of mind knowing that your loved ones will be taken care of after you die by laying out all your wishes in a will which forms the basis of your estate plan.
10. Engage a Financial Adviser
If things get too overwhelming, you can seek assistance from a professional financial adviser and leverage their expertise and knowledge of current market trends.
At Tempus Wealth, we can help you plan and implement effective strategies that can allow you to live the lifestyle you want for yourself and your family in the future. Set an appointment with our team of professional financial advisers and we’ll share more ways on how you can secure your finances for the future based on your unique goals and current financial capacities.
“The views expressed in this publication are solely those of the author; they are not reflective or indicative of FSP’s position and are not to be attributed to FSP. They cannot be reproduced in any form without the express written consent of the author”.
Tempus Wealth is a Corporate Authorised Representative of Financial Services Partners Pty Ltd ABN 15 089 512 587 AFSL 237 590. The information (including taxation) provided in this blog is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.
[iii] Tempus Wealth Financial Knowledge Centre. Page 19. Source: Tempus Wealth
[iv] ‘The ASFA Retirement Standard – 1 January 2017’