From the archives
August 20, 2019
This year Equal Pay Day falls on Wednesday August 28. Today represents the extra 59 days women have to work this financial year to earn the same as men do in a year. Calculated using the 14% gender pay gap for full time workers, with women earning $241.50 less per week then men do on average, women therefore need to work an additional 59 days a year to earn the same amount that men do (currently, average weekly wages for men working full time are $1,726.30). It’s not to be taken literally of course, but as a symbolic reminder of the disparity between earnings.
As with most things relating to gender equality (or anything topical really), with most people being generally supportive, Equal Pay Day can be a divisive topic, with some camps finding it difficult to see why we should be making a fuss, questioning why we can’t just get on with things and stop the complaining. Why do people keep banging on about the same stuff year in year out?
But symbolic days such as Equal Pay Day provide an important way to keep the conversation going. In reality we need to have moments like this etched into our busy calendars because it’s an important conversation to have for a few reasons. These reasons can in short be put down to the sentiment of “the playing field is so far from level it’s not funny”. Here are a few wildly horrifying statistics to give you a taste for what the financial future looks like for many women:
- Firstly, women retire with a lot less than what men do. Owing to a complex combination of workplace patterns, increased likelihood to take time off work in order to provide care for younger (and older) people as well as differences in the way we value and remunerate the jobs performed by (mostly) women in a highly gender segregated workforce is just the tip of the iceberg as to why women accumulate less super over their working life. But retiring with estimates of just under half the super as men, means that we’re have a lot less to live off that we now need to stretch it even further given that we live longer than men. In fact latest research indicates that women will outlive their retirement savings by 12.6 years.
- Women are more likely to live in poverty – with this significant shortfall in superannuation and a greater reliance on the aged pension as a result, women are therefore more likely to face financial insecurity and poverty in older age. In fact around one in three retired women on the single rate of the Age Pension will remain in poverty.
- Women are experiencing homelessness at higher rates than ever- the number of women aged 55 and over who experience homelessness in Australia has grown by 31% between 2011 and 2016 and this is now the fastest growing group of homeless people in Australia. Primary reasons behind women’s homelessness are violence, income inequality along with unaffordable property prices. Often considered as the “hidden homeless” in that you don’t see them “sleeping rough” – they may be living in their cars, or moving from couch to couch or wherever they can find respite in a shelter. But just because you may not see them – please by no means do not think that this enormous group of homeless people are not there. They are very much there.
Hopefully by now you’re seeing that this level playing field analogy is really putting things mildly. And that’s not changing any time soon. Until we transform the way we value women and the work they do in society: by paying those who look after our loved ones just as well as we pay those who clean our teeth or run companies, by having unpaid work more evenly shared between men and women, and by overhauling the way we work so both genders can spend less time at their desks and more time caring for our families – women will always face a financial shortfall.
To fully address these structural impediments will clearly take some time – let’s not be naive about the magnitude of the changes required, and that’s exactly why we started Longevity App – to provide people, especially women, with a bite sized way to support a life time of work. To make the 80% of household purchasing decisions that they make today actually count towards their future down the track without having to outlay huge sume of money. But there’s no doubt there’s no overnight fix – which is why this is a conversation that we simply cannot afford to stop having. We need to have it not just one day a year but every day of the year.
August 16, 2019
Most of us are across the fact that superannuation is how most Aussies put money away for our twilight years, but many of us don’t think too much about the fact that we can also get some more immediate benefits from our super, particularly at tax time (given it’s that time of year).
So whether its claiming for voluntary investments you made into your super last financial year or making sure you get the most out of each tax paying dollar in 2020 and beyond, we’re sharing three of our fave top tips to make your super work for you today.
Tip 1 – Made a Personal Contribution to Super? You can claim it as a tax deduction.
Seriously. You can.
So, for example if you signed up and were using Longevity App to make automated super contributions prior to June 30th you would have made a personal contribution to super in the 2019 financial year. While you can make personal investments into your super in other ways too, not only are these top ups helping your future by building that nest egg for a happy retirement (go you!) but you can likely also claim it on your personal tax return as a deduction. There’s a few things to keep in mind, such that there is a limit on how much you can put into super as a pre-tax and/or concessional contribution (which is what they become if you claim personal contributions as a tax deduction). Currently the max is $25,000 a year and this includes the money your employer puts directly into your super account (aka the Super Guarantee). You also need to fill out a form and submit it to your super fund (they’ll sometimes send them out to you at tax time too).
What’s flippin’ sweet aside from the fact that who doesn’t love a tax deduction is that, if you claim these as concessional contributions (their fancy technical term) on your tax return you’ll only be charged 15% tax within your super fund, a whole lot less than the rate most Aussie’s are paying to the taxman*.
Take this as an example: The average Aussie earns about $85,000 per year. If they were to make $2,000 in concessional contributions to their superannuation in 2019 and claim it on their tax return they’d more than halve the tax paid on that income!
Tip 2 – First Homebuyer? You can user you super to put towards your house deposit.
I know – I don’t know why people aren’t talking about this more either! Saving for a first home is a mission, so we’ll take any help we can get around here. So did you know that you can put money into superannuation, earn money on your investment and then pull it back out to put towards your first home deposit? It’s a government initiative called the First Home Super Saver Scheme.
Essentially how it works is that if you’ve made contributions into your super fund since 1 July 2017 you can apply to have these funds released and their associated earnings to help you purchase your first home.
Side note on the FHSS detail:
- Non-concessional contributions can be withdrawn for first home deposit tax free.
- Concessional contributions and total earnings will be taxed at marginal tax rates with a tax offset of 30%.
- Superannuation Guarantee contributions (ones made by your employer) can’t be accessed under this scheme.
Sounds pretty cool, right? Now of course there are eligibility requirements that you need to meet – for example you need to live in the premises you are buying (or intend to do so ASAP). There’s also a maximum amount of $30,000 that you can pull out as part of the scheme and the earnings you make on the money in your super is also a bit different. But to be honest, this one really makes me wish I could’ve taken advantage of the scheme when I was trying to scramble together a deposit for my first home! It may not get you the whole deposit in one swoop, but every little bit helps!
Tip 3 – Low Income Earner? Earn an immediate return of 50%!
This one’s an oldy but it’s a dead set goody. Basically the government is willing to plop up to $500 into the super accounts of low- and middle-earners if they’ve made a personal after-tax contribution into the same account.
Now I’m sure many of you are asking so what’s the catch? Well not a catch so much, but there’s two bits to it – how much you’re earning and how much you’re putting into your account. If you put $1,000 into your super and you’re earning up to $37,697 you’ll get the full amount. Bam $500. Thank you very much. Earning more? The benefit works on a sliding scale so you’ll still get some money courtesy of the government but just not as much before it tapers off completely at $52,697.
So there you have it. As always make sure you read up on all the details, and consult an accountant or financial advisor so that you don’t trip up on anything if you’re still unsure. But hopefully these three tips that not only help to fatten up wallet in your twilight years, but also help you get more out of your super savings today!
* The one exception here is big earners who take home $250,000 or more a year – you’ll be paying 30% on your personal super contributions which while not quite as great as the rest of us is probably a whole lot less than your current tax rate. TBH if you’re earning that much you probably don’t need this blog.
August 7, 2019
Ok – let’s start off with what even is “micro-saving”? I mean if you’re going to go to the effort of saving money, why not just go hard or go home? Well as its name suggests micro-saving or micro-investing is depositing a small amount of money into an account – whether it be a bank account, superannuation account, or other investment account and ideally doing it regularly. Yep that’s it peeps, it’s really not rocket science. But, in reality, it’s a fairly different approach to the typical saving and investment mindsets that meant many feel we need to be sticking in huge amounts of money to be build our castle on the hill at the end.
So let’s take a look at exactly how micro-savings work, and why these teeny tiny bits could possibly worth your while.
It’s all about compound interest
Think of compound interest as literally the best thing since sliced bread. And in a nut shell that’s why micro-savings tools are the butter on top. The turbo charger on your car engine. The push up bra for your, oh – never mind. In fact, stay tuned for our post in upcoming weeks where we’re going to devote an entire post on compounding because we love it THAT MUCH!
But let’s start with a super quick overview – compound interest 101. In laypersons terms, compound interest is the phenomenon of what happens when you invest some money, it makes a bit (aka interest), and then instead of taking out the bit of interest that you made, you add it to the original investment amount – which means you’ve got even more money to make money from the next time around. If you do that again and again (and probably again) over a set amount of time and “nek minnit” you’ve seriously boosted the initial amount that you invested. Here’s an example from Host Plus :
“Let’s say $2000 earns 10% interest in the first year. That’s $200 interest earned.
In the second year, your original investment of $2000 has grown to $2200 thanks to the $200 interest. Your new balance of $2200 earns 10%. This time you get $220 worth of interest after a year.
In the third year your primary sum is $2420. And on we continue until we realise that we’ve (hopefully) made a hefty chunk of cash thanks to compound interest!”
So what’s that got to do with micro-savings?
Well now that we all can see that compound interest is pretty awesome – even Einstein says so, think about what would happen if you could tip in just that little bit extra to what was already going in? If you hop onto something like MoneySmart’s Compound Interest tool you can play around with how your “regular” compound interest vs “turbo charged” compound interest (thanks to even small additional micro-savings) works – and the difference it makes! It’s literally the snowball effect in action.
Now that’s great but want a pain in the rear when you have to transfer these tiny amounts each time by yourself. Will you (hint – nup). That’s the joy of micro savings tools that automate the entire process for you, and more importantly how something like Longevity App makes sense from cents. If your employer (for those lucky enough to have one) is the engine that pays 9.5% on top of your salary into your super, we’re the turbo charger for your nest egg. There are other options out there too for those who want to put their loose change towards other types of savings. But there’s no doubt that making small behavioural changes no matter how small, done often enough can produce pretty impressive results!
Whatever you decide to do with your money, and the choice is up to you, it’s always good to know that whether your budget is large or small there’s always something out there to help you be more engaged and hands on with your financial future!
DISCLAIMER: information provided in this article is for general information only and and is not intended to act as specific financial advice. It has been prepared without taking into account your financial objectives, situation or needs.
August 6, 2019
August and September are big months for the topic of gender equality. With the latest ABS data on average weekly earnings (used to calculate the Gender Pay Gap) coming out in August and Equal Pay Day following shortly after there’s lots to talk about.
If anyone saw Q&A this week, where Ricci Bartels shared her story about struggling to find employment later in life and the toughest time of her life that she lived through as a result. While highlighting a range of political and social issues that no doubt needs our focus and attention, it was a scarily important reminder of why it’s vital to be as proactive as possible about preparing for our future because it’s so easy for things in our lives to change. Women in particular find themselves particularly financially vulnerable later in life, making it a perfect time to focus on ket gender equality issues such as women and financial insecurity with the imminent release of up-to-date data on the pay gap and its progress being released.
As a part of it, we’ve got lots of great content and articles planned to continue the conversation on financial equality. And, as a little warm up our CEO, Carla Harris got to speak to the awesome team at Women Love Tech about why the stubborn gender pay gap got her on a mission to change our financial future whenever we spend. Check out the article here.