With more Australians living longer, healthier lives and the government increasing age eligibility for pension starting July 1, it is never been more crucial to ensure that your superannuation will serve its purpose – to help you live a comfortable retirement.
If you are in your early 30s, it can be easy to ignore this need as practically you have nearly three more decades before you retire. In fact, a research conducted by the Australian Institute of Superannuation Trustees and the Association of Superannuation Funds Australia (ASFA) reveals that younger Australians are not taking their super contributions seriously; only one in 10 are paying extra money into their super.
You should bear in mind that the present aged pension as well as other government entitlements may likely look quite different when you reach retirement age. Hence, a sizeable fund in your super can help you when pension is not enough.
And young professionals are actually in the best position to maximise their super because they have the advantage of time. A small increase in your super contribution will make a significant difference in your retirement fund.
So to help you boost your super and ensure that your retirement will not be a struggle, here are four tips you can follow to ensure you retire with a sizeable fund.
Four Ways to Supercharge Your Super in Your 30s
1. Choose the Super Fund that is Suitable for You
It is important that you are proactive on where your super is invested, or else, a large percentage of your fund might be allocated in a fund that is not suitable for your situation. Make sure that you choose funds that will not eat up your super via poor investments or excessive fees. Take a closer look at your current super fund allocation and compare it against the market.
Review the associated fees and the range of investment options available to meet your long-term goals. Also compare the insurance benefits provided by each fund. It is also ideal to consult a financial advisor who specialises in super investments so you can be guided in benchmarking your fund.[Related Post: Life Insurance: Why Most Sydney People Don’t Have It ]
2. Merge Your Accounts
You may end up with several super accounts if you have changed jobs several times or you have not paid attention to your super. Keeping multiple accounts means that you are paying multiple fees, which is gradually eating up your money.
Hence, when you have finally identified the fund that is suitable for your preferences and future needs, it is highly recommended to merge your fund from other accounts that you have into one account only. Your financial advisor can help you with this important step.
3. Sacrifice a Portion of Your Salary Each Month
Increasing your monthly super contributions will significantly affect the growth of your retirement fund. Sacrificing a portion of your salary allows you to take advantage of tax concessions by allocating a part of your pre-tax wage into your superannuation. Take a look if you can afford to let go some of your wage every month and add it to your super contributions.
You are allowed to increase your pre-tax contributions up to $25,000 per annum, which is the concessional contribution cap. You can also send after-tax contributions to boost your balance, up to $100,000, which is the non-concessional contribution cap.
You don’t need to pay any tax on this as tax has already withheld on the added contribution, and you can also take advantage of the reduced taxes on your earnings in super.
If you are a low to middle income earner, you might be qualified for a co-contribution from the government up to $500. There are also tax offsets available if your spouse is also a low-income earner.
4. Consult a Financial Advisor
Understanding how superannuation works and using strategies to boost your fund can be a challenge. It can be a complicated area to get your head around especially with the changing landscape in pension and retirement in Australia today. Consulting a financial advisor is ideal if you really want to supercharge your retirement fund, but you are not sure what to do.[Related Post: Australians lack financial literacy, survey says ]
Of course, you need to ensure that you are getting financial advice that you can rely on and you should work with professionals who know the intricacies of superannuation and adept in using insights and strategies to help you boost your retirement fund and ultimately provide you with peace of mind.
For more information on how to supercharge your retirement fund, call 02 9003 0611 to talk to our financial advisor.