No matter how old you are or how much money you earn, now is the time to build your super. Work out what your retirement income could be and the small changes you can make to build your super.
How much super you need will depend on:
* the lifestyle you want in retirement - According to the Association of Superannuation Funds of Australia (ASFA) a comfortable lifestyle for a couple costs about $60,000 a year and a modest lifestyle costs about $40,000 a year.
* how long you're likely to live - People are generally living longer than previous generations. Retirees can expect to live well into their eighties and this means if you stop working at 65, you're likely to need retirement income for at least 20 years or more.
* your big costs in retirement - Are you planning any major spending after retiring? For example, you do you want to pay off your mortgage, renovate your home, or travel? The more money you spend early in retirement, the less you'll have to live on later.
It's never too early to start thinking about your super. Take steps now to get the retirement lifestyle you want.
If you want to boost your retirement income you can:
* consolidate your super into one account * increase your super contributions * put your money into a performanced focused investment option (but get financial advice before you do this) * work part-time before retiring * think about a more modest lifestyle in retirement.
Changes to protect your super balance from being reduced by inappropriate insurance and fees apply from 1 July 2019:
* cancellation of insurance: super funds will cancel insurance on accounts that haven't received contributions for at least 16 months. Your fund will contact you if your insurance is about to end. If you want to keep the insurance, you must tell your super fund or make a contribution to that account.
* no exit fees: there are no exit fees if you decide to leave your super fund.
* fee limit on low-balance accounts: annual administration and investment fees can't exceed 3% of the balance of accounts with less than $6,000. Your account balance is calculated at the end of the fund year.
* inactive account transfers to ATO: accounts with less than $6,000 that are inactive for 16 months will be transferred to the ATO. The ATO will merge it with your other active super account. If you don't have another active account, the ATO will keep your super safe.
Sadly, most people in superannuation schemes have little or no idea how their funds are invested or performing from one year to the next. Reports get thrown in a drawer because the jargon is mind bending.
For most working Australians, superannuation is likely to be their main financial asset outside the family home. That means most of us have a vested interest in financial markets and how super funds are performing.
It’s important to track how super funds are performing in general so that you can assess how well your own super fund is performing.
Planning for your retirement is complex and it's important to get advice from people with specialist knowledge. Having your super regularly reviewed with a licensed financial adviser is key; a lot can be done to dramatically improve your retirement prospects given time and to ensure that it continues to perform and meet your objectives.
Some of the main things to compare when having a review are fees, investment options, extra benefits, performance, insurance and insurance to name a few.
*Source: ASIC's MoneySmart
Brad Tuppack is an Authorised Representative (AR# 461168) of Crown Wealth Group (AFSL 494274)
Trading as Key Financial Advisers Pty Ltd ATF Key Financial Advisers Trust (ABN: 43 843 934 542)
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