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BSB 806 015
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& My money

Why it's important to think about super at every age

Three generations of a family sitting at the dining table

Over our lifetime, our attitudes toward superannuation - and the amount of time we spend thinking about it - are likely to change several times. But, it’s an important part of your future, so taking care of your super throughout your working life is worthwhile.

It doesn’t need to be a big job. There are simple steps you can take to ensure your superannuation can look after you in your retirement – no matter how old you are.

Teenage years

It’s exciting when you first start working and have your own money, to spend how you want to. And chances are, superannuation doesn’t get a second thought. All that’s required is to fill out a form your employer gives you… right?

There are actually a few things to do in those early years of employment, to give a superannuation policy the best start possible. These include:

  1. Making sure that your employer is paying superannuation on your behalf and is paying the correct amount – currently 10.5% of your income.
  2. Combining your super together if you have multiple superannuation accounts from different jobs.
  3. Assessing whether the amount of life insurance cover you are paying for (deducted from your superannuation) is the level you need at this stage of your life.
  4. Checking the Salary Continuance Insurance (SCI) you might be paying and the level of cover you have.
  5. Considering a co-contribution scheme to boost your super from the start.
  6. Finding out if the Low Income Superannuation Tax Offset (LISTO) applies to you.

20s, 30s and 40s

These decades can be a whirlwind of change filled with home purchases, new careers, increased responsibilities, and growing families. While you may have limited time to spare to think about superannuation, you should really pay a bit of attention to the numbers on your super statement.

This is the ideal time to do your research and consider your choice of superannuation fund. Understand where your money is being invested, and make sure that your superfund is making you money. You’re working hard to earn, so make sure your chosen fund is doing the same for your balance. When comparing different funds and options, remember to consider the fees, insurance and any extra benefits, as well as the investment options and performance.

If you have had multiple jobs, take the time to find any unclaimed super and transfer it all into your preferred fund. And if you still have multiple super accounts, make sure you combine them all into one – it will save you money on fees and insurance if you’re only paying it from one account!

Once you have chosen the right fund for you, don’t just leave it. As your life changes, you need to review it. Your insurance needs may change if you become a parent or change career. Take a look at your level of cover and make sure your Super Death nomination is in place.

Taking time out of the workforce when you become a parent can impact your super contributions. If you’re planning a family, think about how you can keep adding money into your super when taking parental leave. The Paid Parental Leave Scheme does not attract the Superannuation Guarantee, but it does allow for voluntary superannuation contributions to be made.

When you’re looking for a simple way to boost your retirement nest egg, consider salary sacrificing or personal super contributions. Find out more about the available tax benefits by visiting the ATO website.

In your 50s

Once you reach 50, your superannuation may become even more important, as you move closer to retirement. This is a good time to determine how much more super you are likely to need and plan for reaching that target.

After decades in the workforce, you may be in a position to make additional contributions to boost your balance in the long run. Work out a budget to see exactly what you can afford.

Also take a close look at the investment options your superannuation fund offers and the life insurance premiums you are paying. You want to make sure your super is working as hard as possible for you.

At some point in your life, you might also think about having a Self-Managed Superannuation Fund (SMSF). This option can require a lot of time, responsibility and knowledge, so make sure you do your research and seek professional advice.  You can find out more on the Money Smart website.

After 60 and retiring

Now that you are in your 60s, you’ll probably have a more realistic idea of your retirement age. Hoping to retire early? Or continue working past 65? Make sure you’re across the rules, regulations and potential tax implications. Regulations around superannuation will change over time. If in doubt, seek advise.

As well as thinking about your retirement age, you should also consider whether you will want to be paid a lump sum or super pension payments. If you haven’t already, make a detailed budget for your retirement, so you know exactly how much income you will need to live comfortably in the years ahead.

To help prepare for a smooth retirement, also consider:

  • Ensuring you have ‘liquid’ assets – those that can easily be turned into cash – to meet your income requirements.
  • Making a ‘downsizer contribution’ (up to $300,000 or $600,000 for a couple) to your super if adult children have left home and you sell your home to move somewhere smaller.
  • Checking whether you’re entitled to the Age Pension and Pensioner Concession Card.

 

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