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Getty ImagesNew data from AMP Bank reveals solopreneurs could be risking $500,000 in retirement savings by neglecting their superannuation.
A retirement crisis may be brewing under Australia鈥檚 economic radar, and it鈥檚 not among the unemployed, but among the self-employed. A new survey commissioned by AMP Bank has found that close to half of Australia’s smallest business owners, including sole traders and micro-businesses, are not regularly contributing to their superannuation, potentially setting themselves up for financial insecurity in retirement.In a national poll of 2,000 small business operators, 55 per cent reported that they make regular super contributions, meaning that 45 per cent do not. That鈥檚 a significant shortfall, especially considering that most salaried workers in Australia benefit from the mandatory Superannuation Guarantee, now set at 12 per cent.Also Read: Chinese threat or American pressure? What really fueled Australia鈥檚 1.3 billion missile purchaseBut super contributions remain optional for the country鈥檚 2.2 million self-employed workers, including tradespeople, creatives, consultants, and other gig economy participants. Live EventsAnd many are choosing to forgo them, often to keep their businesses afloat.鈥淚t’s understandable that many small business owners prioritise reinvesting in their business, which can mean super contributions fall by the wayside鈥, said John Arnott, Director at AMP Bank GO on X.The long-term cost of short-term focusThe financial trade-off might seem minor in the short run, but the long-term implications are staggering. AMP Bank鈥檚 modelling shows that contributing just $100 a week to super starting at age 30, assuming a 6 per cent return, could yield over $500,000 by retirement at age 65.That means skipping those small contributions now could result in a half-million-dollar shortfall later in life, a costly oversight for anyone banking on a comfortable retirement.Also Read: Why Australia is taking only 280 people a year from Tuvalu, even as one third want to fleeWho鈥檚 falling behind?The research revealed apparent disparities across industries and regions. Solopreneurs and businesses with four or fewer employees were among the least likely to contribute to super, with just 50鈥55 per cent making regular payments. Owners of younger firms (1鈥3 years old) and those located in rural areas were also among the least engaged with super savings.Meanwhile, small business owners in financial services showed the highest contribution rates (71 per cent ), while those in creative fields, already prone to income instability, had the lowest, at just 46 per cent.A system not built for freelancers and sole traders?The issue isn鈥檛 just financial, it鈥檚 also structural. Australia’s superannuation system was designed mainly with full-time employees in mind, not the growing population of freelancers and sole traders. Flexibility may be a feature of self-employment, but it’s also a flaw in this case.Unlike employees, the self-employed don鈥檛 have an employer automatically paying super on their behalf. And unless they make a conscious effort to pay themselves, and their future, first, they may reach retirement with little or nothing saved.Also Read: Mysterious interstellar object enters solar system; the largest, fastest, and only the third ever recordedWhat can small business owners do now?Arnott urged small business owners to balance short-term survival and long-term planning. 鈥淓ven small, regular contributions can have a massive impact thanks to the power of compounding,鈥 he said.He also recommended practical strategies for boosting super savings. These include setting up automatic contributions through your banking app or accounting software, making lump sum contributions during periods of healthy cash flow, using government incentives such as co-contributions or tax deductions, and seeking support from your super fund, accountant, or other small business owners.(You can now subscribe to our Economic Times WhatsApp channel)
Read More News onsuperannuation contributionssmall business ownersretirement savingsAMP Bankfinancial insecuritysuperannuation system Australiacontribute to superannuationfreelancers and sole tradersretirement crisis in Australia
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(You can now subscribe to our Economic Times WhatsApp channel)Read More News onsuperannuation contributionssmall business ownersretirement savingsAMP Bankfinancial insecuritysuperannuation system Australiacontribute to superannuationfreelancers and sole tradersretirement crisis in Australia(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless