Super 101: How well do you know your retirement plan?
Superannuation, fondly referred to by most Australians as “super,” is essentially a retirement savings plan that is mandatory for most employed people. Contributions to super are made by both employees and employers, and are designed to provide a source of income for individuals during their retirement years.
When it comes to how much super you should have by retirement, the Association of Superannuation Funds of Australia (ASFA) recommends that a couple should aim to have at least $640,000 in superannuation savings at retirement to support a comfortable lifestyle. For a single person, the recommended amount is $545,000.
Employers are required by law to make contributions to their employees’ super funds on a regular (at least quarterly) basis. These contributions are known as “Superannuation Guarantee” contributions and are currently set at 10.5% of an employee’s ordinary time earnings. Additionally, individuals can make personal contributions to their super fund, known as “voluntary contributions,” which could be eligible for additional tax incentives.
When choosing a super fund, there are several factors that you should consider. One important factor is the fund’s investment performance, as this will have a significant impact on the fund’s overall value over time. Additionally, it’s important to compare the fees charged by different funds, as some funds may charge higher fees than others. Some other features to consider are insurance options , a trustee or a life insurance policy that covers death or total permanent disability which is offered by many funds.
An important feature of any superannuation fund provider’s service is the level of customer support they provide. Many funds offer online tools, apps and resources to help individuals manage their account, as well as provide access to financial advisors or other professionals who can provide guidance and advice.
Lastly, you might consider a self-managed super fund, which is a type of account that you can set up and manage yourself. The investment options are more flexible and you have more control over your savings with a self-managed account. However, it’s important to note that this type of super fund requires a lot of time and knowledge to be managed properly, so it is not a suitable option for everyone.
Superannuation should be an important aspect of your long-term savings plan and goals, so you should carefully consider your investment options and providers before making any big decisions.