Retirement is a time to relax and enjoy the fruits of your labour. But for many couples, the reality can be quite different. A persistent disparity in superannuation balances between men and women often leads to an uneven playing field as they embark on this new chapter.
The Gender Super Gap
The reasons for this gap are well-documented. Women often face lower earnings, career interruptions to raise children or care for family, and part-time work upon re-entry. This can significantly impact their retirement savings compared to their male counterparts, as demonstrated by the latest figures, which show that women aged 60-64 have an average super balance of $289,179, almost 25 per cent less than men the same age (average balance of $359,870).
Super Strategies for a Balanced Future
Fortunately, Australia’s superannuation system offers couples avenues to bridge this gap and create a more equitable financial foundation for their shared retirement.
1. The Power of Spouse Contributions
For couples where one partner earns less than $40,000, consider making non-concessional (after-tax) contributions to the super account. This allows you to potentially claim a tax offset of up to $540, boosting your super balance and reducing your tax burden.
2. Contributions Splitting
This strategy allows one partner to transfer a portion of their concessional (before-tax) contributions to the other’s account. This can be particularly beneficial if one partner is younger and hasn’t yet reached pension age, as their super won’t be assessed for social security purposes.
3. Re-contribution to Maximise Tax Benefits
For couples with a significant difference in super balances, the re-contribution strategy can help level the playing field. The partner with the larger balance can withdraw funds and re-contribute them to their partner’s account. This can be particularly advantageous for couples nearing retirement, as it potentially reduces tax on death benefits and helps the receiving partner qualify for a higher age pension.
4. A Team Effort
Sharing super benefits extends beyond individual accounts. Couples can potentially transfer a combined $3.8 million into tax-free retirement phase accounts, increasing their overall financial security and easing the transition into retirement.
A Personalised Approach to Your Future
The superannuation strategies outlined above are just a starting point. Each couple’s situation is unique, and a personalised approach is crucial to achieve optimal results.
So, how will the retirement picture look for you?
The best way to find out is to contact our experienced financial advisors for a tailored assessment of your circumstances and guidance on the most suitable strategies for your specific needs.
General Advice Disclaimer:
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
