Why Aren’t Women in Business Protecting Their Superannuation?

One of the problems facing women in the Australian business sector that, come retirement, they tend to be worse off than employed people.

How is this? Wouldn’t running and owning their own business net them even more retirement opportunities than the average Joe?

In a word, no.

One of the major problem for small business owners in the sole trader or partnership structure is the noncompulsory superannuation structure. Without being enforced to do so by law, many women are sacrificing the opportunity to take advantage of superannuation and are running into problems when it comes time to retire.

Think about the start up costs of a business – many people don’t realise just how much capital has to go into a new business, even if they are sole traders. Insurance, running costs, new hardware, software, electricity, phone bills. It’s no wonder super payments are at the bottom of the priority list.

What are the problems?

Namely, that by failing to commit to a superannuation, business women are relying on other means for their retirement, which is landing them in hot water. One common means, for example, is for a business woman to sell her business when the time comes and use the profits from the sale to fund her retirement. It’s a sound practice in theory, but unfortunately many business women are finding themselves disappointed by the sale, or that they’re entirely unable to sell their business when the time comes.

Why aren’t more business women looking to protect their superannuation?

Contributions made to super (also known as concessional contributions) have a cap of $30,000 for business women 50 years of age or over. Those who make under $300,000 annually are looking at a 15% tax rate, with those who make over $300,000 annually looking at a 30% tax rate.

In short, by maximizing their contribution, business women could be setting themselves up for a cushy retirement.

And wouldn’t we all like one of those?

It’s very easy for business women to save up money for their retirement well before the deadline hits. The strategy of waiting until the last minute and hoping that your business sells for enough money to keep you going after retirement is a gamble.

Instead, look into the long-term saving strategies offered by superannuation. With some early planning and patience, you can snowball enough money to support yourself well through retirement, and – if you maximize your contribution – you might even have enough to buy yourself an early retirement.