Think HBR

Superwomen must consider their super

Tabitha Tworek
Insight Wealth
Women in business are all around us - they are motivated, passionate, prefer to build their independence, may even enjoy some flexibility in hours occasionally, but probably work more hours than the average employee of a similar role.
Amongst the excitement and sense of community that we build around us, we sometimes look after our clients too well, and we forget to make room for ourselves, especially when it comes to investing in our future.
In Dale Partridge’s book People over profit he quotes the first stage of business in infancy - ‘The Honest Era’. He says, “When a company is first born, it is much like a human baby – pink faced, innocent, existing almost exclusively for the benefit of others.”
We overspend our time and energy on our earlier clientele as we grow our business footprint to do the best job we can. Based on research about those who make up the self-employed community, we know that at least 30% are women. This number is now likely to be much higher.
There's a hidden cost for this entrepreneurial gene, that sneaks up and isn't obvious until you have a good look at superannuation. Pull those glasses on and have a close look at your strategy. It may not be obvious in year one of being self-employed, when your competing employee role speeds ahead with their retirement plan by only the 9.5% contribution to superannuation. It may not even be that obvious by year two or three, but the compound difference over a working life is profound.
As detailed in the ANZ Women's Report: Barriers to Achieving Gender Equity (July 2015) As a 40-year-old employee, 20 years of employer contributions of 9.5% superannuation (retirement age in line with your preservation age of 60 years), $50k starting balance, income $50k pa plus 2% per year. And if you are a saver at heart and were inclined to salary sacrifice at any stage in your working career, the gap widens with each year of additional savings and the compound returns.
For the average 40-year-old, self-employed, choosing not to do the 9.5% contributions to super for the same 20 year period, will achieve a retirement wealth balance of $420,331, achieved only through compounding of returns based upon the original money being invested to earn a return.
An employee is rewarded with an additional $248,000 based on the same investment return and earning potential. It’s scary and seemingly unfair – but very true!
NOW $75,000 $75,000 NOW
Year 1 $85,969 $81,750 Year 1
Year 2 $98,010 $89,108 Year 2
Year 3 $111,221 $97,127 Year 3
Year 4 $125,708 $105,869 Year 4
Year 5 $141,588 $115,397 Year 5
Year 10 $246,769 $177,552 Year 10
Year 15 $411,613 $273,186 Year 15
Year 20 $668,568 $420,33 Year 20
The report from ANZ found that the retirement gap is significant for women anyway, which is compounded if they are also self-employed. “The national pay gap, when extended over a typical career, means women earn on average $700,000 less than men over their lifetime.”
If the gap is contributed to by so many influencers, self-employed  women can influence one outcome directly, by building a plan to prioritise their long term retirement savings, committing to regular investment into retirement savings to close the gap. Sources

For further information contact Insight Wealth on (02) 4941 1888, email or visit

Tabitha Tworek Tabitha Tworek
is a passionate financial planner, providing specialised and individualised advice for women and families. She believes that we all deserve to choose our future when it comes to finances, helping people to break down barriers and find their next step to overcome the first obstacle. As the Operations Manager for Insight Wealth, she works with a skilled team of planners and support staff, who all work towards helping their clients achieve success, security and peace of mind.