After forty plus years of working, there is no doubt that we all want a comfortable retirement. And for many of us, superannuation will be our largest retirement nest egg outside the family home. That’s why it’s never too early to start topping up your super. By planning ahead now, you can set yourself up to truly enjoy your post-work years.
Don’t just wing it
We all see the pictures of happy retirees sailing around on crystal clear blue waters or laughing on the golf course with their friends. We all think that will be us someday. But if you are early on in your work life or busy raising a family, then that time after work just seems so far away and not worth worrying about now.
But, when it comes to superannuation the “she’ll be right” plan of attack just won’t cut it. We are living longer, so retirement nest eggs need to last a long time. And for many Australians, the employer Superannuation Guarantee contributions will not be sufficient to reach required superannuation balances.
We want to challenge you to give that distant future some thought now so that you can live the life you want in retirement.
18, 48 or 68…Planning is your friend
No matter what your age, getting professional advice regarding your superannuation will address a number of valuable areas including:
- Strategic asset allocation to ensure your superannuation is invested correctly for your timeframe and tolerance to risk;
- Monitoring and adjusting your superannuation strategy to ensure it continues to be right for you;
- Providing you with the confidence to be disciplined to stay invested when times are tough and to help you avoid mistakes like investing when the market is overvalued;
- Adjust your strategy when the government makes changes to superannuation legislation;
- Ensuring you have the right insurances in place;
- Managing fund fees so you can get the right solution without eating away at your future savings;
If you are already retired, advice can help you manage your superannuation so it lasts longer in the draw-down phase.
The things we hear
We thought you would get some value from us sharing some of the most commonly asked questions we hear from clients regarding superannuation.
I can’t access my super for so long – why should I worry about it now?
It is true that superannuation is a big pile of money that you can’t touch until you reach a certain age. However, when it comes to saving for retirement, superannuation is one of the best long-term tax effective investments. The maximum tax rate on superannuation earnings is currently 15 percent, compared to the marginal tax rate which could be up to 45%.
Compound interest is referred to as the eighth wonder of the world. This is because the earlier you start saving for the future, the more time compound interest has time to work its magic.
Also, depending on your superannuation fund, you can have a say in how your money is invested to suit your timeframe and tolerance to risk. Investment choice can have a big impact on the final lump sum. Over a working lifetime, the same amount of money invested in different investment options can produce different results in the end. That’s why it pays to take an interest in your super as soon as possible.
What’s the best superannuation fund?
This is like asking someone in automotive market – what’s the best car? When it comes to a car, the answer will depend on the person’s situation. And this is the same for superannuation. No two people’s financial situation and investment requirements are the same. The best superannuation for you will depend on a number of factors including but not limited to your: job, investment timeframe, tolerance to risk, the complexity of your strategy and insurance needs.
Government employees end up with so much more superannuation – how can I do the same?
Quite frequently the reason government employees have such big superannuation balances at the end of their careers is due to the increased contributions made over time. Generally, government employees receive 12% super contributions from their employer and then the employee contributes an additional 3-5% of their pre-tax pay to superannuation. These additional contributions and the power of compound interest make a significant difference to their superannuation balances.
If you are self-employed or work in the private sector you too could supercharge your nest egg by making additional concessional and/or non-concessional contributions to your superannuation.
Paying yourself forward through investing in superannuation is a powerful strategy that will make a big impact on your future wealth.