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Hewison Insights

Women and Super

Chris Morcom
Partner/Private Client Adviser
3 Apr 2011

Recent research by the Australian Institute of Superannuation Trustees highlighted that three out of four retired women between the ages of 50 and 80 years of age were reliant on some form of government pension or allowance. 

As reported in the Sydney Morning Herald , the research also showed that taking time out of the workforce cost women a substantial amount in lost retirement savings.

In light of this, I thought some modelling to reflect the extent of the situation  would be interesting. For instance,  looking at the amount a person would need to contribute to superannuation in excess of the normal 9% employer contributions to ensure a comfortable retirement.

Let’s meet Sandy and Rizzo.  Rizzo lives for today and doesn’t really put her mind to the future. Sandy on the other hand is more cautious and wants to make sure she provides for her own future.

They both start work at 20 years of age earning $30,000 per annum; they work hard and both receive pay rises of $5,000 each year.  By coincidence they both have children at 30 years of age and with supporting partners each decide to stay at home for eight years while they have more children. 

After eight years, they return to the workforce part-time, earning $37,000 per annum (this is roughly half the full-time wage they earned when they left the workforce).  They continue part-time work, slowly increasing their hours, and then at age 50 return to the workforce full time earning $82,000 per annum.  (I  have assumed constant inflation at 3% per annum throughout these examples).  Both Sandy and Rizzo invest their superannuation in the same fund, earning net returns of 8% per annum.

Rizzo doesn’t think about super and only receives her employer’s contributions of 9% of salary.  She manages to accumulate around $350,000 in superannuation by the time she is 60 years old, which could provide her an income of around $21,000 a year without drawing on her capital.

By contrast, Sandy thought ahead. She knew that with time out of the workforce she would need to put a bit extra away from her first day of work, and so arranged to contribute 15% of her gross salary to superannuation – in addition to her employer’s contributions.  She manages to accumulate a superannuation balance of $930,000 by 60 years of age, which would provide her an income of $56,000 a year.  This retirement income is almost the same as her salary after tax and super contributions at age 60.

Contrast this experience to that of their friend Danny.

He is much like Rizzo and doesn’t contribute extra to super.  However, he doesn’t take time out of the workforce nor does he engage in part-time work.  A member of the same fund, and enjoying constant salary increases of $5,000 per annum, Danny manages to accumulate $550,000 in superannuation by 60 years of age…without putting any extra contributions in himself.  This will be enough to give him an income of around $32,000 per annum in retirement without touching his capital – approximately 70% of his final net salary at 60.

The graph below provides a comparison of the three friend’s superannuation position at 60 years of age.


While still accumulating $380,000 less than Sandy, Danny will have an extra $200,000 in super by 60 than Rizzo.

Sandy’s strong financial position at 60 shows the value of forward planning, while a comparison of Danny and Rizzo’s position highlights the impact of taking time out of the workforce.


Forward planning can be of benefit at all stages of life, but when it comes to planning your retirement, it is best to start early.

For women who’ve not made early preparations, don’t give up trying.

There are also a couple of things your spouse can do to keep growing the family retirement savings, to make up for your time out from the workforce, these include:

-Spouse contributions

  • These are contributions to your superannuation fund by your spouse.  If you are earning less than $10,800 a year, then your spouse will receive a tax rebate of up to $540 for making these contributions.  The maximum rebate is paid for contributions totalling at least $3,000.  If your income is over $13,000 then your spouse would not receive a rebate for the contributions.
  • Using our example above, if Rizzo’s husband contributed $3,000 a year for each year she was not working, then her superannuation at 60 would be increased by around $50,000.

-Superannuation Splitting

  • This is where your spouse transfers some of their superannuation contributions to your superannuation fund, if you are under 55 or you are under 64 and still working.
  • Up to 85% of a person’s Employer and Salary Sacrifice contributions (referred to as Concessional Contributions) can be split to  their spouse.  This can allow a couple to keep their respective superannuation balances even. 
  • Splitting contributions may assist if you intend to contribute additional amounts to superannuation once you are over 50 years of age.  The government is proposing to allow those over 50 to continue making Concessional Contributions of up to $50,000 a year, but only if their superannuation balance is less than $500,000.  Splitting contributions throughout your working life may enable higher contributions to be made later to “catch up” on your retirement planning.

-Extra Super Contributions

  • If you are not working, then perhaps your spouse could make additional contributions to their super fund.  That way, between the two of you, your combined retirement savings is kept on track.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.