Half of Australia’s sole traders skip super, risking a future retirement crisis

More than half of Australia’s 1.7 million sole traders are skipping superannuation contributions to cover day-to-day expenses, which potentially leaves a generation of self-employed workers financially exposed in retirement. New research from payments platform Hnry reveals half of Australia’s sole traders have already deferred super payments as they focus on more immediate costs such as fuels, energy and food. Adding to the woes, is a further 41 per cent say they will delay contributions in the future – double the figure recorded just three years ago – as cost-of-living bites hard. One of these sole traders is photographer, videographer and content creator Jay Maguire, who left a traditional media company to go out on his own. “Going out on my own has been exciting, but it’s definitely been a learning curve,” he says. “Like most people starting a business, I’ve had to be pretty careful with cash flow. Between rent, fuel, food, equipment, software subscriptions and all the day-to-day costs that come with running a business, I’m making sure every dollar is working towards helping the business grow.” Mr Maguire said while starting his business has been rewarding it has come with challenges. He admitted super hasn’t been high on the priority list just yet. “When you’re employed, super just happens in the background and you don’t really think about it,” he said. “Once you’re self-employed, it’s completely up to you, which makes you realise how important it actually is. “At the moment, my focus is on building a strong foundation and generating consistent revenue, but as the business grows, increasing my super contributions is definitely part of the plan. “Understanding how powerful compound interest can be has probably been one of the biggest financial lessons I’ve learned since starting out on my own.” Mr Maguire’s story is far from unique, with Hnry Australia managing director Karan Anand saying the superannuation system is simply not built for the way millions of Australians now work. “For sole traders, there’s no employer making compulsory payments in most circumstances, so super becomes another financial decision competing against rent, fuel, groceries and business costs,” he said. Mr Anand said many sole traders were also in the dark about the support already available to them, including co-contribution schemes, contribution rules and tax incentives specifically designed for the self-employed. Mr Anand called for better education and support for sole traders. “Australia’s sole trader workforce is growing by at least 30,000 people every year, but many are navigating super and retirement planning without enough support,” he says. “The reality is that Australia’s super system was built around traditional employment, but millions of Australians now work differently. “As self-employment continues to grow, the systems supporting retirement savings need to evolve alongside it.”