Women punching above their Super weight

Trish has been at home looking after our 3 kids since 2004 (done an amazing job) but also has run a small at-home business. Many of the early years her income was well below $18k so we didn’t see the value putting in superannuation concessional contributions (no tax savings).

Our FIRE strategy has given us the problem of a growing dividend stream 🙂! We now have the opportunity to put the full concessional contribution of $27.5k (edit: FY25 now $30k each) into her super each year and we have also used the super carry forward scheme (using unused concessional caps).
 
These are the 6 Super strategies we have reviewed and 4 used so far in our FIRE journey
  1. We always took advantage of the super co-contribution scheme where the Government give you an additional 50% of what you put in. How could we resist making 50% return in one year!
  2. Use catch up (carry forward) if you can (<$500k balances).
  3. Max out or add to both your supers with concessional contributions ($30k each pa) if it helps reduce your tax.
  4. Contributions splitting (roll over your partners previous year’s concessional contribution 85%). No catch up option available so need to do each year if you wish. Cam who had nearly 3 times Trish balance now splits his maximum (85%) of his super contribution into Trish’s and plan to do this until they equalise (estimated to be 60). See the ATO https://www.ato.gov.au/forms-and-instructions/superannuation-contributions-splitting and your accountant/financial planner to confirm it suits you. The reason to do this is to keep below the caps (and future ones that may be reduced). For high balances, these include pension mode, concessional contributions caps and increased tax rates.

We haven’t done these two below yet but may consider in our mid to late fifties:

5. Non-concessional contributions $120k pa. Some caps and other criteria to be aware of.

6. Downsizer – don’t know the in/outs of this one but might be worth looking into if you were selling your home.

We have always had a low cost, high performing industry fund in High Growth (shares).
 
The recent ABC article on average super balances got me thinking. Trish is punching well above her weight level!  Her balance is amazing compared to the table within the article, with seemingly minimal sacrifice along the way and it’s all been done with a below average wage.
 
Why is this important to balance out super in couples? Many mother’s literally give their whole life to look after the family and there is still a big gender wage gap.  Women are the more likely to become homeless than men in later life. The chilling statistics can be seen here. In domestic violence situations it accounts for 77% of females being homeless. We plan to be together forever, but it’s good to know Trish has a great super balance and I have insurance in my super to provide well in case I’m not here.
 

Although it is currently the best vehicle I also consider future governments changing the rules! For example in Australia there is an 18 month wait for caravans (compounded by COVID, but the industry has gone nuts with all the boomers before COVID)! Once you hit preservation age, some people buy their dream by pulling it out of their super. We know a few people who have done exactly that and they get more pension now too (good for them as it’s their money). Will government allow this forever? This is why we live by the 1/3 rule!

Super only forms part of our FIRE plan (we want to RE) but currently it is the most tax effective vehicle in the strategy and well worth the one or two hours per year to maximise it’s performance.

Do you have a specific superannuation strategy?  We LOVE to learn from others, so please share it with us in the comments!

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