Superannuation isn’t something any of us can afford to ignore. Regardless of your age, the more you know about Super, the more stable your financial future is likely to be.
Many people take it for granted that their super is just steadily growing in the background somewhere, and that they’ll be able to pull on a magic golden parachute when they retire, but this won't always be the case.
So, in the interest of raising our national financial IQ, I’ve taken the liberty of addressing some of the more common mistakes we’re making when it comes to Super.
1. Losing Accounts
Sounds ridiculous to think that you can ‘lose’ super, but if you change employers and switch to a different fund, it can be easy to let your old account slip through the cracks. It’s estimated that 5.8 million super accounts (about 20%) are lost, accounting for $18.8 billion1. Luckily, the ATO makes it really easy for you to find any lost accounts of yours, using their SuperSeeker Tool. Just have your Tax File Number handy, and punch in your details to recover any old accounts.
2. Multiple Accounts
Data released in 2012 showed that Australians held almost 32 million super accounts, with an average of three accounts per worker.2
While it may seem like a good idea to ‘play the field’ with accounts with multiple funds, you’re actually more likely to pay more in the long run. This is because you’re paying multiple administration fees and insurance premiums. By combining your super into one account and diversifying your investment within that account, you cut down on the admin costs your super incurs.
3. Going with the flow
When we start a new job, we’re often so busy that it can seem like the easier option to just throw our faith behind the designated super fund of our new employer. In fact, almost 80% of Australians are with their employer’s default fund3.
For many people, this may be the right choice, but taking the time to examine your options a bit more closely is always a good idea. For example, if you prefer to have a bit more control over how your money is invested, and if you prefer to be a bit more actively involved with your super admin, see what your employer’s default option will allow before you sign up.
4. She'll be right...
Under current Australian law, your employer must make contributions of 9.50%. Most people hear this and think this compulsory contribution is all they’ll need to live comfortably in retirement.
The fact is that by relying solely on these compulsory contributions, you may not even have half of what you need for life after work4. For this reason, it’s definitely worth your while considering salary sacrificing or personal contributions, especially as you draw closer to your retirement years.
These may seem like simple fixes, but acquiring this rudimentary knowledge can actually save you money if learnt early and acted upon. If you’re interested in learning more about how you can boost your Super and ensure you spend life after work in the comfort you deserve, why not speak to an expert?
You can make an initial, obligation-free appointment to visit with a Bridges Financial Planner here. The Greater has partnered with Bridges, Australian industry leaders in Financial Planning, to provide our customers with clear concise information so they can make informed choices about their super.
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