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Women and the business of super - some helpful tips
21 August 2015
Wealth creation is a lifelong journey, but the path can take some dramatic twists and turns. This is especially true for women as they navigate the gender pay gap, the super gap, and the gaping hole in their earnings when they take time out of career, usually to fulfil caring roles often for children or elderly parents.
This short presentation, by BT’s General Manager Superannuation Melinda Howes, is specifically for women and their super and helps put some of the issues in perspective.
Below are some financial tips to help you think through what may be necessary for your wealth creation plan to work.
Your first job
This is your first real opportunity to save so grab it with both hands while you have the capacity. Start by redirecting some of your income into a separate high interest savings account while you map out your plans for the future.
"If you don’t think about what you want, and aim beyond the moment, you can be limited by your current situation", says Westpac Senior Financial Planner, Diana Saad.
You might start saving for an overseas trip, your wedding, a first home or an investment property. The amount you put aside is not as important as establishing good financial habits that can repay you with interest.
Preparing for maternity leave
If you are planning to take maternity leave, consider arranging for your partner to make a spouse contribution to your super fund.
You may also be eligible for the government co-contribution, especially if you begin maternity leave part way through the financial year and your annual salary falls below $49,488 in 2014-15 ($50,454 in 2015-16).
Diana points out that you may be eligible for the co-contribution two years running, if your maternity leave extends into a second financial year.
Dealing with divorce
Diana says she sees a lot of smart, sophisticated women who still leave the responsibility for joint finances to their partner. But what if your partner leaves or passes away?
No-one enters marriage expecting divorce. But in the spirit of 'expect the best but plan for the worst', make a point of knowing how your joint finances work. This includes bank accounts, investments and superannuation.
And make sure you own your own life insurance policies. Cross-ownership of life insurance is common between spouses (except for income protection which must be held in your own name). But there can be unintended consequences if your marriage breaks down and you need to make a claim.
"Say you have trauma cover in your ex-partner’s name and you are diagnosed with cancer. He can receive the payout", says Diana.
Women live longer than men on average, which means they need more savings to fund their retirement. Unfortunately, women are still retiring with much smaller nest eggs than their partners.
With this in mind, the sooner you start re-directing income into super or other investments, the longer you can have for compound interest to work its magic. "It’s never too early to start saving for retirement, even if you just put away small amounts. You could salary sacrifice into super or build a share portfolio. The choice is yours, as long as you are saving money that can increase in value and generate income in retirement", says Diana.
Much of this information can be found on: http://www.bt.com.au/getmoving/wealth-building-for-women/