Having a family can create a ‘super baby debt’ for mothers of up to $50,000 by the time they reach retirement age.
Taking time off work means you may not have any employer contributions being paid into your super account. And if you are taking a few years off, this can have quite an impact on your retirement nest egg. Even if you are working part-time at all during this period, then your employer will only pay money into your super account if you’re earning more than $450 a month.
To overcome this problem, women should adopt the ‘one per cent rule’ by adding an extra one per cent to their superannuation contributions for the rest of their working lives.
You should also think about what you can do to continue to build on your super savings while you are out of the workforce. One way of doing this is for your partner to make contributions on your behalf. ‘Spousal contributions’ are where your spouse makes a contribution to your super account and they receive an income tax rebate. It’s a great way to keep growing your super while you’re taking time off; be it to raise a family, or for other reasons.
Also, don’t forget about the government’s co-contribution scheme. If you are a low or middle-income earner, you can make an after-tax contribution of $1,000 a year to your super account and the government will provide up to 50 cents for each dollar you contribute, up to a maximum of $500, provided you meet the eligibility requirements.
If you’re taking a few years off, it’s certainly something to consider. But remember, you can always put extra into your super account.
If you would like to discuss any issue to do with superannuation please contact us on |PHONE| or |STAFFEMAIL|.
Reproduced with the permission of the The Association of Superannuation Funds of Australia Limited. This article was originally published at www.superguru.com.au
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.