What is Superannuation?
Superannuation is a mandatory contribution made by your employer on your behalf to a fund specified by you. The contribution must be made on behalf of all Australians until they reach 65 years old. The contribution is currently 9.5% of your salary, and there have been proposals to gradually increase the rate of superannuation over time. This money is invested on your behalf, by your fund, and will be there for you to live off when you retire. On top of this mandatory contribution, you can also sacrifice part of your salary and make personal contributions to your fund. Your superannuation will replace your income when you retire and you want to ensure there is enough for you to live comfortably without sacrificing the lifestyle you currently enjoy.
Why is super so important?
A report released by the Australian Bureau of Statistics found that the median superannuation balance for Australian workers aged 55-64 years old was just $71,731. Yet the ASFA Retirement Standard Report found that to live a comfortable, yet not outlandish lifestyle, a single would need $41,000 per year and a couple $56,000 per year. So as a single person, if you were to retire at 65 years old and live for another twenty years, you would need $820,000 in superannuation just to cover the basic costs of living and some comfort such as occasional travel and private health insurance. This is far short of the median $71,731 currently reported in Australia for those very close to retirement age.
It is important to know where your superannuation is going, and why. This is your money, and 9% of your salary accumulated over time is a significant amount of money. It is generally advisable to monitor the fees being taken out and why, and a good idea to have an in-depth understanding of the investment strategy your superannuation is part of. Many Australians have their super sitting in low-risk investment strategies such as cash when there are ways available to grow your superannuation far more quickly ensuring you don’t have to sacrifice your comfortable lifestyle when you retire.
It is advisable to stay aware of your superannuation balance, and how you can increase contributions where possible. Topping up your super fund when you can, will make a huge difference in the long run.
To find out how you can gain a greater understanding of your superannuation and how to invest and grow to its full potential, give Addisons a call today or send us an enquiry.
Consolidating your Superannuation
If you’ve had more than one job, chances are you have more than one superannuation fund and are therefore paying fees and charges to more than one fund unnecessarily. Consolidating your superannuation into one fund will instantly save you money and help you keep track of your balance. A surprising statistic is that there is currently over $17 billion in lost and unclaimed super in Australia! Who knows, some of this money could be yours. You can use the Government’s ‘Super Seeker’ tool to track down your superannuation and consolidate to one fund:
http://www.ato.gov.au/individuals/content.aspx?doc=/content/33301.htm&alias=superseeker
