Financial Advice for Real People: How Super Are You?
When it’s time to put your feet up and sail off into the sunset leaving behind years of blood, sweat and tears – otherwise known as work – it could well be too late to address any shortfalls in your super.
It’s generally agreed that to retire at the age of 65 you will need about $35,000 to $60,000 per year as a couple, or between $24,000 and $44,000 per year as a single person – depending on your lifestyle.
And if you live to, say 86, that’s 21 years where you won’t be earning. And that means as a couple you will need between $735,000 and $1.26 million or as a single between $504,000 and $924,000. However, scary as it sounds, some experts put those figures even higher than this, touting $1 million as the magic number … EACH!
That’s a significant amount even using the smaller figures and living a very modest lifestyle.
Now depending on your age, you only have a certain amount of time to hit these magic figures and ensure your golden years are silver plated. It can be quite daunting when you actually look closely at the numbers, but it doesn’t need to be. The smartest thing to do is contact a financial adviser as soon as possible to look at what changes can be done to boost the coffers.
Obvious factors you need to take into consideration are how long you might live, what sort of lifestyle you wish to achieve and what medical expenses you might incur. And that’s without factoring in unexpected hiccups such as the need for a new washing machine, mechanical work on your car or an emergency vet visit.
The first thing a good financial planner will do is take a dive into your existing super fund and determine its capacity for making you money.
This includes what fees you are paying that perhaps are not really relevant or necessary. It may also be a case of changing funds to one a little kinder on the bank balance.
Many people don’t realise they are paying life insurance in their premiums – an insurance which might have been important when the kids were at home and dependent on them but a little less essential when they become empty nesters and have paid off the mortgage.
In fact, annual life insurance premiums within super have leapt from $100 per year more than 15 years ago to $800 a year!
Most people do not appreciate that fees such as these, and others which include administrative, investment management fees, adviser and withdrawal fees, impact on the size of their retirement nest egg.
A financial adviser can also determine whether the type of investment within the fund is the right one for you and change it to a more – or less – conservative one depending on your needs, whether that means higher growth or longer terms.
If you have the funds you can add to your employer contributions using either concessional (before-tax) contributions and non-concessional (after-tax) contributions.
The federal government under its tax-free co-contribution scheme will also provide up to $500 a year to anyone who makes a non-concessional contribution if they earn less than $51,813 for the 2017/2018 year.
It’s important to consolidate any superannuation accounts and to also find any lost super which can be easily done via www.ato.gov.au/individuals/super/keeping-track-of-your-super/
If you would advice on building your super, contact us today
