Set yourself up for the retirement you want
As retirement gets closer, it’s important to start retirement planning so you’re financially and emotionally prepared. Planning early could be the best way to ensure you’re working towards the retirement you want.
When do you want to retire?
The age you plan to retire can have a significant impact on how you live out your retirement. Essentially, you want to have the right amount of money to enjoy the retirement lifestyle you want.
Pushing out your retirement by a few years could boost your retirement savings, but there are other ways to grow your super without working longer than you want to.
Deciding when to retire is a big decision which can involve many factors such as:
- the age you can access your super
- how much super you have and whether you have enough
- where you want to live and if you own your home
- your health and potential medical expenses
- your readiness to stop working
- how long you’ll need to live off your super
- will you still have debts and if so, how much debt you have
- whether you still have dependants
- if you have a partner, what their plans for retirement are.
How will you generate the money for your retirement?
Your super contributions
Currently, employers are required to contribute 9.5% of their employee’s gross income into super. But depending on your retirement goals and current age, these super guarantee (SG) contributions may not be enough to fund your lifestyle in retirement.
Our technology includes retirement simulators that can show you how you’re tracking towards your retirement goals and whether your super contributions will fund the retirement you want.
More ways to fund your retirement
There are other options to help you fund your retirement. You can:
How much super do you have and how much will you need?
Working out how much super you already have is simple, if all your super is in one super fund.
For many of us who have more than one super fund, it may be a little more complicated. We have access to super searches to help—it takes the hassle out of finding your lost super.
When it comes to how much super you’ll need, that largely depends on the type of retirement lifestyle you want.
That’s why we focus first on understanding what this looks like to you, so we have a deeper understanding of the life you want to live in retirement.
Will your money run out?
If you’re close to retirement and worried about not having enough super, you may want to consider these options:
Delay your retirement
- It could give you more time to add to your super.
- Retiring after 60 will mean you can withdraw your super tax-free.
- It could increase your super balance without compromising your income.
Review your investment strategy
- Your investment strategy should reflect the time you have until retirement.
- Reflect on your investment portfolio and what type of investor you are.
Live on less
- Adjust your budget and consider cutting back.
- Compare your budget to what’s considered to be a modest and comfortable lifestylein retirement.
Find alternative ways to fund your retirement
- Downsize your home and invest the money left over.
- Sell other assets.
- Consider a reverse mortgage.
Will you be able to live on the Age Pension?
In most cases, the Age Pension may not be enough to fund a comfortable retirement on its own, but it can still play an important role by qualifying you for the pensioner concession card, so you can save money on prescriptions, utility bills, council rates and other expenses.
Age Pension rates
For up-to-date information, eligibility and pension rates visit Centrelink.
Want to make the most of your super? Here are eight steps on how to take control of your super, check your super balance and get it sorted to make sure your retirement savings are on track.
1. Understand how superannuation works and what the benefits are
Your super builds up throughout your working life through a combination of superannuation guarantee (SG) contributions made by your employer and any voluntary contributions you choose to make. Any time money is deposited into your super account, it’s invested on your behalf by a trustee from your super fund. Investments can be made into property, shares, cash deposits and other assets depending on your default investment profile, or where you’ve specifically chosen to invest. When your investments generate returns, your super balance grows.
Your super is important because it’s an investment in your future, and can help you enjoy a comfortable life in retirement.
Many people think of their super as an investment they don’t need to worry about until retirement, but it pays to get better acquainted now. The earlier you get on top of your super, the more effectively you could grow your retirement nest egg.
2. Check if your employer is paying your super
The SG contributions made by your employer are the foundation of your future savings, so it’s important to check they’re being paid correctly. You can do this by reviewing your pay slips, which should show the amount of super being paid into your account. This should be at least 9.5% of your ordinary (not overtime) earnings if you’re aged over 18 and earn $450 or more each month.
You can also check your super fund statements or login to your super account online to see exactly what’s been paid in. Keep in mind that super contributions only have to be paid quarterly, even if your wages are paid weekly or fortnightly, so you may not see those super payments recorded on your pay slip showing up in your fund for a few months.
Also make sure you’ve provided your super fund with your tax file number to prevent extra tax being taken out of your SG contributions.
If you think there might be a problem with your SG contributions, you can speak to your employer, follow it up with your super fund or contact the Australian Tax Office (ATO).
3. Check how much super you have today
Keeping track of your super balance is an important step towards taking control of your super. In many cases you can check this online with your super fund, or via the statements they send you.
It’s one thing to know what your balance is, but another thing to understand whether it’s on track to help you achieve the kind of retirement lifestyle you’re hoping for.
The Association of Superannuation Funds of Australia (ASFA) estimates that, to live a comfortable life in retirement, a couple collecting a part Age Pension will need combined super savings of $640,000, while singles will need $545,000.
If retirement is a long way off – or even if it’s not – you can use our technology to project your super balance at retirement based on your current balance, contributions and investment options.
4. Find lost or unclaimed super
It can be easy to lose track of your super, and for your super fund to lose track of you. This could happen when you change jobs, as you might opt for your new employer to make SG contributions into a new fund and forget to roll over what you’ve accumulated in a previous one.
If you change jobs and wish to remain with your existing super fund rather than have your employer set up a new one for you, ask your employer for the necessary forms to fill out, and have your existing super fund account details handy.
Another common way that super gets lost is forgetting to update your details with your super fund when you move house. In fact, lost super is so common, there’s around $18 billion sitting in more than six million lost super accounts in Australia. All of that money belongs to people just like you, and it’s waiting to be claimed.
You can search for lost or unclaimed super by doing a super search with your current super fund or by logging into your MyGov ATO account to find your super funds.
5. Consolidate your super into one account
Of the 14.8 million Australians with super, around 40% have more than one account. If that’s you, there may be advantages to rolling your accounts into one super fund. These include paying one set of fees, which could save you hundreds of dollars each year and even thousands over many years.
Consolidating your super also makes it easier to keep track of your overall balance, and could save you money in insurance premiums if you have insurance cover through several super funds.
If you do decide to consolidate your super, make sure you know whether you’ll be charged exit or withdrawal fees and whether you risk losing features and benefits that may be attached to the account you’re considering closing. Chatting to one of our advisers could help you weigh up the pros and cons of consolidating.
6. Check the insurance cover in your super
Your super account may include a range of personal insurance options, which are paid for from your account balance. Super funds generally offer three types of insurance cover – life insurance, total and permanent disability, and income protection.
Insurance through super can often be cheaper than personal insurance bought outside super. This is because super funds purchase insurance policies in bulk, and they are usually available without health checks.
Contact your super fund or log in to your account to review the insurance options available and consider whether the insurance cover doubles up on anything you have outside of your super fund. It’s worth checking that the insurance suits your needs – which may change throughout your life – as you may be able to increase, decrease or cancel your cover accordingly.
7. Keep your beneficiaries up-to-date
How your super is distributed in the event of your death is known as nominating your beneficiaries. It’s important to notify your super fund of your choice and keep it up-to-date if your circumstances change, as super is treated differently to other assets in your will.
There are two types of beneficiary nominations you can make: binding and non-binding.
If you make a binding nomination, your super fund is required to pay your benefit to the person or people you’ve nominated, as long as the nomination is still valid at the time of your death. Bear in mind that you can’t always make binding nominations and that they generally only remain valid for three years.
If you make a non-binding nomination, your super fund will make a decision about who to pay your death benefit to. Your benefit will be paid to those people considered to be financially dependent on you and, in some cases, this might not be the person or people you’ve nominated.
8. Review your investment options within super
Most super funds allow you to choose how your super is invested, and generally, the main difference between the investment options will be the level of risk you’re willing to take on. Many people choose to take on higher risk investments with the potential for higher returns while they’re younger, then change to more stable investment options with lower returns as they move closer to retirement.
Research your super fund’s investment options to help decide which investments are right for you. Some funds offer online self-service options for changing investments, while others will require you to contact them directly.
Remember that the most appropriate investment option may change depending on the economy, your age, circumstances and stage of life, so it’s worth considering and reviewing your investment options regularly. Staying on top of your super may give you a better chance of building money for a comfortable future.