Extra time for super contributions could help bridge the super gap for women
2 September 2020
Women in their 60’s, who are less likely to have had the opportunity to build as much retirement savings as their spouse, stand to benefit from recent changes to superannuation rules which mean those retiring at 65 have an extra window to contribute to their superannuation funds.
Until just recently, individuals aged 65 or more had to pass a work test to make any further contributions to superannuation. This required an individual to undertake a minimum of 40 hours of work in any 30-day period during the financial year, prior to making the contribution.
From 1 July 2020, this age limit has been increased to 67, giving people an additional two years to make voluntary contributions to superannuation, before the work test applies. This presents a great opportunity for some people and particularly women, to add to their nest egg.
If you fall into any of the categories below, making additional contributions to your superannuation is worth discussing with your adviser:
Recently retired individuals who have received an inheritance from an elderly parent.
Women who inherit a lump sum on the passing of their spouse.
Couples where one individual has retired but the other continues to work and build joint retirement funds.
Individuals who have sold their business, particularly on deferred settlement terms.
Recent retirees who have funds accumulated outside of superannuation.
Anyone aged 65-67 with a compensation or insurance receipt.
For those that qualify, the changes to super contributions could help their retirement funds to stretch a little further and continue to reduce the pressure on the publicly funded age pension scheme.
For single women aged 65 and over, these changes present an important opportunity as they now have a larger window to add to their superannuation, particularly with funds that have been inherited.
Of course, it also provides men in that age group with the same opportunity and will be particularly useful for those that have not had the benefit of compulsory superannuation for their entire working lives, enabling them to transfer some of their savings from outside of the superannuation system to a more tax effective environment.
No matter what your age or gender, working with a financial adviser can identify opportunities to assist you to manage your wealth effectively and help provide you with the safety net you need for a comfortable and secure retirement.
Talk to your adviser to find out how to get the most from your superannuation, or get in touch with the SMSF Administration and Advisory team for more information.