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Superannuation Advice for the Working Mum

Retirement planning is not easy for some sectors of society, women in particular. It’s common knowledge that women are retiring on 40% less than their male counterparts, and will have a harder time trying to save money to contribute to it. This can happen when a woman withdraws from the working world to have and raise a child. Accepting work that pays less or that has fewer hours so that family commitments can be met is another reason why women may not be making enough super contributions.

As prevalent as this issue may be, the real pain is felt when a woman reaches retirement and realizes that there isn’t enough for her to have the decent retirement lifestyle she deserves. But there is a way for the working mom to ensure that enough money gets contributed to her super, and eliminate the worry of not having enough.

Working Moms Can Split

For those working women who have a partner and who are considering becoming mothers, a good road to smart retirement planning is to split the super. This works for those women who are currently in part-time positions, but only temporarily. The working mom can agree to receive an annual split of between 50 and 85 percent of whatever contributions their partner made over the past year until more working hours can be obtained. According to current legislation, one partner can split their annual contributions with the other partner as long as they stay below the contribution caps.

Benefits of Choosing To Split the Super

One major advantage to splitting the super is that low-rate caps can be accessed. These caps currently amount to $180,000 per person aged between 55 and 60 on any withdrawals of a lump sum from any taxable components.

Another benefit is that a younger spouse’s super assets can be protected from the Centrelink means test when super contributions are split from an older spouse.

Where super funds are split with an older spouse of 60 or older, that spouse may also receive benefits in the future by being able to obtain lump sums without having to pay taxes on them. Alternatively, the older spouse can choose to begin receiving tax-free income from the super.

While choosing the split the super may not be the most ideal superannuation advice for retirement planning, it can provide a working mom with the funds she needs in order to plan for her later years.  In addition to super splitting, saving can begin simply by putting aside extra change or having one less coffee per week once you have started working. Even the smallest amounts can make a big difference when the time comes to retire.

The best time to start planning for retirement is now, because the sooner funds are put away, the sooner they can begin to grow. You may have asked for the Super Splitting form, but may not be sure about other details such as caps or how to split your SMSF. That’s why our experts are available any time for a free 30-minute consultation.

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