Does My Bum Look Big in This?
Hi Scott,Recently on Facebook a woman around the same age as me (36) asked how much super others had. This resulted in many women of a similar age posting that, despite taking time out to raise kids, their super was well into six figures. Curious, I ran my numbers through some online calculators and freaked out! I am currently single, earning $58,000, with no kids, and have only $56,000 in super. What can I do, apart from after-tax contributions, to boost my super?
Leanne
Hi Leanne,You’ve just asked the financial equivalent of ‘does my bum look big in these pants?’First up, I wouldn’t give a pixel about random people crowing on social media about the size of their … assets.Second, your balance will generally be a function of when you started work, whether you take time off (for kids, illness, Eat Pray Love), and what you earn (the more you earn the higher your employer contributions, and the greater your ability to chip extra in).Still, I’m as competitive as anyone, so I hunted down the figures for you (see table above):The average super balance for a woman your age is $48,874, according to ASFA.Yet what really matters is what your super looks like on the day you retire: the average balance for people at the time of retirement in 2015-16 was $270,710 for men and, frustratingly, only $157,050 for women.Thankfully, you’ve still got over three decades to fit into your super spandex pants.Here’s what I’d suggest you do. Go to the Government website moneysmart.gov.au, head over to their superannuation calculator, and punch in your details.Actually, I’ve already done it for you, and here’s what I found: based on your age, income and super, you’re on track to retire with $247,623. (This figure is in today’s dollars … after taking into account inflation.)Not bad, but let’s move the dial. If you switched from your super fund’s default ‘balanced’ option into a ‘high growth’ option, the calculator suggests you’d boost your fund by about $20,000, to $267,941.And if you switched to a low-cost fund, you’d increase your end balance by almost $50,000, to $297,609.Better in your pocket than a bank executive’s!And once you buy your first home, you might consider salary-sacrificing an additional 5.5% of your wage into super (making 15% overall -- see ‘Barefoot Step 5’ in my book), which would boost your end balance by more than $150,000 to $402,663.Yet the single best thing you could do right now is to work out a way to earn $5,000 more a year.You can do that by preparing well for your end of year review -- by working hard and setting performance goals -- and then asking for a raise. Or starting a side hustle. Being single gives you more flexibility to try some of these options. There are a lot of ways to do it (again, see my book).And one more thing, don’t compare yourself to anyone else.The only person you’re competing against is yourself.
Scott
