Superannuation can be a confusing topic and for some, the mere mention of the word ‘super’ can make their eyes glaze over as they tune out.
But, next to your home, super is probably the single largest investment you’ll make in your lifetime. So, it pays to take an interest in it.
There are things you can do now to boost your super, which could make a big difference to your future financial position and therefore what your life will look like in the years after you stop work.
These five quick tips demonstrate just how straightforward super can be. So get started now - grow your super and start planning for a successful future. After all, it’s your money and you’ve worked hard for it!
The money that goes into your super now will need to provide you with an income once you retire, so the sooner you get to know your super, the better. Taking a keen interest in your super now could make a big difference to the type of lifestyle you will be able to afford to lead in the years to come.
Whether you’re just starting out in the workforce, or are well established in your career, it’s important to investigate things like how many super accounts you have, how much you are paying out in fees and whether your investment strategy and your insurance cover meets your personal circumstances.
Most of us shop around to get the best bank account or the best mortgage rate, so why not our super account? It just makes sense.
These days most people have the ability to choose which super fund their money is paid into, so when you start a new job tell your new employer which fund you’re with and you will always be able to keep track of your super.
Whether you’re familiar with how interest works or not, it’s safe to say the effects of compound interest over decades can be extraordinary. You earn interest not only on the money put into your super, but also on the interest that money earns.
It’s worth putting aside even a small amount of money from each pay to contribute to your super. You can make contributions from your pre-tax or after-tax salary and there may be tax advantages in doing so.
The overwhelming majority of Australians with superannuation accounts invest in their super fund’s default investment option (also known as a Balanced or MySuper investment option). Default investment options are suited to members who would prefer their investments to be managed by investing in a range of asset classes.
But when you have 30 years still to work, you may wish to invest in a growth or high-growth investment. These types of investments are generally riskier than a balanced option and may achieve greater negative or positive returns over the long term.
In the same way, it could be considered an investment risk for someone approaching retirement to be invested in a high growth option. Instead, a more conservative approach is usually advised for those with only a few years left in the workforce, simply because they have less time to ride out fluctuations in the market. Of course, it is advisable to obtain independent advice to ensure you make the investment decisions that suit your individual needs and circumstances.
You will generally have some Death and Total and Permanent Disability cover (often referred to as ‘default cover’) allocated to you when you open a super account and the premiums for that cover are deducted directly from your account.
Depending on your age and personal circumstances you may require more cover, less cover or no cover at all. That’s why it’s important to consider how much insurance you would need to cover your debts and take care of your dependants in the event that you became disabled and unable to work, or worse still, passed away.
How much is enough to finance your life in retirement? It seems to be the question on everyone’s lips these days. Websites like the government’s moneysmart.com.au can help you work out how much you need and how much you may have in retirement based on your current financial position. These types of calculators can also estimate how much you will have by retirement age if you start topping up your super now.
So start today. Do some research and get to know your super. Your future self will thank you for it!
Prime Super is your surprisingly straightforward super fund. Start the New Year with a super health check - visit primesuper.com.au.