Saving for Retirement: Getting The Most from Superannuation

Superannuation is a savings plan for retirement that works by placing a specific amount of your annual income in a high investment fund that matures as you do. These funds are habitually called ‘superannuation funds’ because they deal only with superannuation and as such are only accessible after you reach the minimum preservation age, which is typically around 55 years in Australia. However, some superannuation policies may have an unpreserved amount that can be accessed earlier.

When you join a superannuation fund the money you contribute monthly is invested on your behalf, or managed. Some super funds allow you to select an investment option whereas others have one general investment portfolio that they use. Usually these portfolios include fixed term deposits, property, Australian equities and international investments.

When you first take out a superannuation policy many financial experts will suggest investing your money into a higher risk portfolio – the first 5-10 years of your working life – in order for you to generate a higher return and maximize your profit, after this time has elapsed they may then suggests using lower risk portfolios later on in life so that you ensure a high retirement income.

In Australia there are two ways to increase your superannuation the first is by working for an employer who under Australian law must contribute 9% of your weekly income into your nominate retirement fund or by you making additional payments into your nominated fund by way ‘voluntary contributions’.

The first method of increasing your superannuation has seen many Australians with small sums of superannuation scattered across the nation, this is mainly attributed to leaving their place of employment and starting elsewhere. Unfortunately, small sums of superannuation do not generate a substantial return whereas larger sums do. Therefore, by combining your preserved superannuation amounts you gain additional value when you retire.

To see if you have any outstanding superannuation please visit - ATO Website

The Australian government has also introduced two new policies that enable you to make the most of your superannuation. The first policy introduced in July of 2003 is a co-contribution scheme where for the first $1000.00 you voluntarily place into your superannuation fund the government will match this payment with $1,500 a year, being the maximum benefit any one person can receive in a single financial year. The second policy now coming into effect is that Australian superannuation can no longer be taxed meaning that when you claim your preserved superannuation in retirement the Australian government can no longer take a percentage of your lump sum.

On a final note, when considering a superannuation fund ask about fees deducted, commissions paid and any other costs incurred because these take a considerable slice out of your final retirement capital and when you are entering your twilight years you want to be as comfortable as possible and retain a high quality of life.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.