Why is it important to focus on retirement and super now?

Focusing on retirement means saving up for it. The way we do that in Australia is through our superannuation.

What is superannuation?

Superannuation is a tax effective way to save for your retirement that you typically can’t access until you retire.

Your employer will contribute 9.5% of your salary into a chosen super fund.

The way super funds work is that you all give your money into a pool and then the super fund has professional investors that take that money and invest it into a whole lot of different products on your behalf. This is called a diversified portfolio and they charge you a fee to do this.

You’re probably thinking, I’m young and not planing on retiring soon – so why do i need to think about it?

Association of Superannuation Funds of Australia (ASFA) has calculated that for a healthy retiree, between ages of 65 and 85 they will need ~$43k per year as a single and $61k as a couple. This equates to a lump sum of $640k as a couple and $545k as a single in retirement (also assuming a partial aged pension).

Those numbers are big. We know disciplined saving plans are important, think of your retirement as a huge one to make sure you live the life you choose and your super doesn’t run out before you do.

The good news is, that by increasing super contributions when you’re younger can have big big (compounding!) effects when you’re older.

Where to get super from?

Most people can choose where they get their super contributions paid into.
Speak to your employer about that

When choosing a super fund, check out comparison websites such as Canstar.

Things to look for in a super fund (ASIC Moneysmart):

  •  Fees – the lower the better. you can’t control performance by you can control fees.
  • Note if you have more than one super account, you’re paying multiple fees so consider consolidating them.
  • Investment options that align with your level of risk
  • Performance – look at funds that have performed well over the last five years rather than the best performer from last year
  •  Insurances – what is covered and what it costs. Typically super funds have a level of death, disability and income protection insurance that you will automatically be covered for. If you don’t need this, call your super fund and cancel it – it’s typically cheaper to similar cover outside super and you can increase it if you need.
    More information: https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions