Superdooperannuation. Perhaps this word might be more effective at getting the average Australian to pay a little more attention to their superannuation savings – which let’s face it, is an extremely dull topic, even to type.
But this week I was reminded of why this is an important matter, largely by figures showing the poor state of Australia’s retirement savings, particularly for the average woman. It follows a link I was sent to a superannuation calculator by Industry Super Funds, which compares the gender balances of men and women.
In this link I discovered that my balance is significantly higher than the average woman and average man. But this did not make me happy, it made me disappointed.
The average balance of a 36 year old is around $36,000 for women and $54,000. Can this be right? Computer says yes.
Compare that with the $1-million plus dollars that is needed to retire comfortably and it’s a huge worry for the economy.
The fact that my balance is higher is not surprising or significant because I’ve always worked, sometimes the pays been great, but not always in media. Yet even when I haven’t been paid, such as during maternity leave, I’ve still put a little money into my superannuation.
Now before I start to irritate myself for being one of “those” annoying I did this and it worked types, here’s a list of some of the easiest and most tax effective ways to boost your super.
1. Low income earners may be eligible to make an after-tax contribution to your super and take advantage of the Federal Government’s Co-contribution scheme, which can be up to $500. Financy more? Check out this link.
2. Higher income earners might wish to use salary sacrificing to make additional before-tax contributions to super and tax advantage of that 15 per cent tax rate. Financy more? Check out this link.
3. It doesn’t matter what income you are on, it’s wise to do a search to see if you have more than one super account. And if you do then you might want to consider claiming any lost super that you didn’t know about. Financy more? Lost super accounts can be found here.
4. Consolidate your super into one account and save on multiple management fees. But just be careful which accounts you close, because not all super funds are created equal and some might have lucrative insurance policies in place which may not exist in another account.
5. Cash boost. If you suddenly find yourself with some extra cash it’s not always appealing to transfer it into your super. I get it. But if you do have a little that could be saved, your super fund is a relatively safe place to park it.
6. Like any financial product, it’s a good idea to compare your fund to others. This involves looking at performance and fees, and ask yourself whether you could be getting a better deal elsewhere.
7. Seek professional advice if you are unsure. There are plenty of financial advisers out there and your super fund may be able to answer simple questions.
8. Finally, look at your investment mix. Have you gone with the default balanced option or are you all in with shares and taking more risk? The argument is that the younger you are, the more risk you can afford to take, which the reverse may be true for those closer to retirement age.