An Industry Super Australia report has shown that nearly half of all Australians retiring from now through to 2055 will not have a comfortable retirement, and single men and women will be hardest hit. It is estimated 45% of all Australians now aged between 25 and 29 will retire without enough money for a comfortable lifestyle unless drastic changes are made to the pension and superannuation system. So what can you do to change this trend and ensure you're set up for retirement?
When Beyonce famously called for all the single ladies when her smash-hit track was released in 2008, it was a celebration of all the single ladies doing their own thing. It became an anthem for all the ladies who weren’t going to wait around for a man to ‘put a ring on it’.
Now fast forward seven years and unfortunately a recent report released by Industry Super Australia has shown that all these single ladies who have spent the last seven years footloose and fancy free on the dancefloor probably would have been better off if someone did, in fact, ‘put a ring on it’.
And it’s not just the single ladies. The single men appear to have missed a good opportunity too.
Because the report released by Industry Super Australia has shown that nearly half of all Australians retiring from now through to 2055 will not have a comfortable retirement, and single men and women will be hardest hit. 63% of single women and 50% of single men will fall below the benchmark, and it is estimated 45% of all Australians now aged between 25 and 29 will retire without enough money for a comfortable lifestyle unless drastic changes are made to the pension and superannuation system.
Sadly, women of all ages and wage groups – regardless of age or marital status – are set to be worst off. Two thirds of women now aged between 55 and 65, and half of those aged between 25 and 29, face an income-poor retirement. In fact, the average Australian woman retires with around half the balance of the average Australian man.
This is because women still earn less than men for equivalent jobs and they are more likely to have a career break to raise children. Combine this with a longer life expectancy and women are less likely to have what they will need for a comfortable retirement.
But for single women, entering into a marriage for the sake of improving your superannuation balance is not the answer either because unless you are a high income earner, the report also predicts that 45% of couples retiring in 2055 will also have less than what they need for a comfortable retirement.
So what is the answer?
Unless you are Beyonce, absolutely everyone – especially the single ladies – need to take more of an active interest in their superannuation and planning for their retirement. Beyonce reportedly earned $54.5 million dollars in 2015 but the rest of us did not so we have a bit more work to do.
And it is not as hard as it seems.
The trick is to take a more active interest in your superannuation as well as look beyond your existing superannuation fund to explore options to increase your earnings between now and when you retire.
Here are a few handy hints that all the single ladies (and any member of the Australian working population) can follow:
1. Get to know your superannuation and check your statement online
We all check our bank balances on a weekly (sometimes daily!) basis but it is surprising how many people do not know the current balance of their superannuation account. All too often people have multiple superannuation accounts with no idea where they are or how much is in them! Get into the habit of routinely checking your superannuation and take an active interest in watching your balance grow.
2. Consolidate all your superannuation accounts
Often if you have worked in different jobs, especially when you are younger, your previous employers may have nominated a superannuation account on your behalf and you could have money floating around in multiple accounts you have completely forgotten about. This means you are paying multiple fees on small amounts of money which is not cost effective. Consolidate all your superannuation into one account and if you don’t know where it is, there are organisations and websites that can help you to find it such as findmysuper.com.au
3. Calculate what you will need for retirement
Once you retire, you’ll need a regular income for around 20 years, often longer for women. Speak to your financial advisor or use online tools such as superannuation calculators to calculate how much superannuation you will need for a comfortable retirement. Don’t forget to factor in travel, holidays and all the fun things you will want to do when you retire.
4. Make additional before tax or after tax contributions to your super fund
This will help you build your superannuation quicker and there are possible tax concessions for doing so – speak to your accountant or financial advisor to discuss your options. You may choose to contribute a small additional amount each month which you will hardly notice now but it can add up to tens of thousands by the time you retire.
5. Benefit from government co-contributions if you are a low income earner
The superannuation co-contribution scheme is designed to help low income earners boost their super. If you are a low or middle income earner and make personal after tax super contributions, the government will also make a co-contribution if you meet the eligibility criteria. Speak to your accountant for details.
6. Understand how your superfund is investing your superannuation
If your superannuation is invested with one of the larger superannuation companies in Australia, they manage it on your behalf but you still have the opportunity to nominate how you would prefer to have your super invested. This may include a high, balanced or low risk superannuation investment strategy which can be spread across a wide range of options including property, shares, fixed interest, cash, term deposit and more. Contact your super fund to discuss your superannuation investment options.
7. Take an active interest in laws and policy changes affecting superannuation
Changes are sometimes made to the laws affecting superannuation including how much super you should be paid, how much it will increase over time and when (and how) you can access your superannuation. Don’t make any assumptions and always keep on top of any recent or proposed changes that might affect your nest egg.
8. Consider a Self-Managed Super Fund
Some people do not want to the leave the responsibility of their superannuation investment strategy in the hands of a larger fund and wish to have complete control of their own superannuation and can do so via a Self-Managed Super Fund (SMSF). There are fees associated with setting up and auditing a SMSF each year but there are also advantages of having a SMSF in place. Speak to your accountant or financial advisor to see if this option is appropriate for you.
9. Purchase property via your SMSF
Did you know that you can purchase property via your SMSF? You can even borrow money to purchase property via your SMSF. Conditions and considerations apply but there are advantages of purchasing via your SMSF including tax and capital gains concessions. Again, speaking to your accountant or financial advisor can assist with this decision.
10. Think beyond your superannuation fund for wealth creation opportunities
In addition to paying closer attention to your superannuation fund, it is important to think beyond your fund for wealth creation opportunities which will help you achieve financial security in the longer term. Investing in shares is one popular option and so is investing in property.
Research has shown property investment to be less volatile than shares which is good since the returns are likely to be more stable. Whereas the value of shares can rise and fall overnight, property typically rises and falls in value more gradually. Recently we witnessed the Greek debt crisis wipe more than $40 billion from the Australian share market in a single day and the value of the Australian dollar took a tumble too – all created by an economic crisis on the other side of the world!
Plus, research carried out in 2011 showed that residential property investment achieved the highest return of 10.1% pa and 11.6% pa respectively over ten and 25 year periods. This compared favourably to Australian shares, which returned 8.4% pa and 10.8% pa over the same periods.
Property has made more millionaires than any other investment In Australia. More than 58,000 millionaires have been created each year since 2001 via property investment and by 2020, this number is expected to grow to close to 2 million millionaires. This is pretty exciting stuff.
What’s more – property investment does not discriminate and anyone can be successful at it. In fact, some of our most successful and impressive property investors at Investor Assist are women.
We have had a number of single men and women in their 20’s purchasing property – usually as an investment. One client was 28 years of age and bought her first property in Butler as an investment before she purchased her own house to live in.
Another great example is a recent client, Di, who works in the mining industry and had savings to invest. Rather than spending all her money on travel (which is one of her major passions), Di used the skills of the Investor Assist team to help her plan for her future and build an investment property.
The earlier you start planning for your retirement, the bigger nest egg you can expect to have. If you start taking an active interest in your superannuation investment strategy and planning for your retirement in your twenties, you will have at least 30 years to better grow your nest egg.
Just think what 30 years of additional superannuation contributions or 30+ years spent growing a property portfolio could do to the total value of your personal wealth by the time you retire. The difference can equate to not just tens of thousands of dollars, but possibly hundreds of thousands.
So based on the recent research and findings, we are taking this opportunity to call on all the single ladies (and any other hard working Australian) to take a more active interest in their superannuation investment strategy and better plan for retirement.
Because unlike Beyonce, the majority of the female Australian population do not earn $54.4 million in a single year, have an estimated net worth of $450 million and receive a $5 million dollar engagement ring when they finally meet someone they think it worthy of ‘putting a ring on it’. And realistically the chances of finding a future husband worth $550 million (so you can have a combined net worth of $1 billion) are also pretty slim.
So if you are a single lady, don’t wait around for your Jay-Z to come along – now is the time to get off the dance floor and take matters into your own hands.