Superannuation is so often \u201cout of sight \u2013 out of mind\u201d. <\/p>\n
It builds away slowly in the background but it\u2019s not something we think about for months or even years. <\/p>\n
But it\u2019s a core part of our financial health, so it pays to check in every year.<\/p>\n
Top 5 things to check<\/p>\n
1. What is your balance?<\/p>\n
Check how much you have and compare it to last year. <\/p>\n
Our super money isn\u2019t going to move in a straight line. It\u2019s held in investments, which rise and fall with the market, but it is important to know where you are sitting in any one year. \u201cTreat this as data,\u201d Finder personal finance guru Sarah Megginson said. <\/p>\n
\u201cYou shouldn\u2019t necessarily be panicking or taking action based on that, you\u2019re just noticing.\u201d<\/p>\n
2. Where are you invested?<\/p>\n
You can choose how you want your money to grow \u2013 whether in high growth, balanced or conservative portfolios. <\/p>\n
Where and how you invest might depend on where you are in life, Ms Megginson said.<\/p>\n
Importantly, you have control over your investment profile. <\/p>\n
\u201cWhen you\u2019re younger, you have more time ahead of you, so you can afford to, if you choose, to have your funds in a higher growth fund. That means higher returns, but also higher risk. As you get older, you might want to move them out of those riskier investments into something a bit more stable,\u201d she said. <\/p>\n
\u201cThe great thing is, you have a lot of control over your super. You can shift the percentages. You might be 45 and have 70 per cent in a higher risk growth fund, and 30 per cent in a really conservative fund \u2026 there are a range of different risk profiles you can choose from.\u201d<\/p>\n
3. What insurance do you have, and do you need it?<\/p>\n
Your insurance needs will change over time, so it\u2019s good to check what insurance policies you have in your super and whether you think you still need them. <\/p>\n
The usual products include life, TPD and income insurance. <\/p>\n
4. What fees are you paying?<\/p>\n
You want to make sure you\u2019re getting a good return for the fees you are paying.<\/p>\n
\u201cI get feedback from people who say, \u2018I don\u2019t even know what a good fee is meant to be,\u201d Ms Megginson said. <\/p>\n
\u201cThat\u2019s where you can do a little bit of research and find out, are these fees reasonable, am I paying too much? Am I getting really good service, advice and support having my money in this particular fund? Or can I get better value elsewhere?<\/p>\n
\u201cThe difference between even just 1 per cent per year in fees can be the difference of tens of thousands of dollars by retirement, or, depending how far you\u2019ve got ahead of you, then six figures.\u201d<\/p>\n
5. Look to the future<\/p>\n
Most super funds have a tool to forecast what your super is going to be by the time you retire based on your current circumstances. <\/p>\n
\u201cThose tools are really helpful, because it can help you connect to the future,\u201d Ms Megginson said. <\/p>\n
\u201cIf you see, \u2018oh, I\u2019m actually on track towards a million bucks here\u2019. If you can actually see where you are going, it can help you to feel a bit more motivated about it all.\u201d<\/p>\n
Big mistakes to avoid<\/p>\n
Have you consolidated all of your funds?<\/p>\n
Have you consolidated all of your money into a single fund?<\/p>\n
For a lot of people, this is the quickest and easiest thing you can do to save money and start growing your wealth. <\/p>\n
That\u2019s because we pay fees to professionals to manage our super money. <\/p>\n
So if your money is spread out between different funds, you\u2019re losing more money in fees, and that means less money for you in retirement.<\/p>\n
Missing out on extra contributions<\/p>\n
Every dollar matters and a lot of Aussies think you only get super from your employer.<\/p>\n
But we can also add to our balances and bump it up on our own. <\/p>\n
You can put in concessional contributions of up to $30,000 each year and claim these as a tax deduction. <\/p>\n
You can also put in non concessional, or post tax contributions, from your own savings. <\/p>\n
Alongside this, you can bump up balances through spousal contributions or government co-contributions. <\/p>\n
Withdrawing or accessing super early<\/p>\n
There will be extreme circumstances where drawing on your super money early might make sense, but the majority of experts agree that it is generally a mistake to pull out money before retirement. <\/p>\n
That\u2019s because when you withdraw money, you lose potential returns from the power of compounding, and that means a lower balance and more financially challenged retirement. <\/p>\n
Can kids get on the super train?<\/p>\n
Yes. Parents can set-up a super account for their children if they have entered the workforce and are earning an income, even in just part-time or casual roles.<\/p>\n
And putting in even just very small amounts of money at such a young age can yield astonishing results.<\/p>\n
Ms Megginson is the author of the upcoming book \u201cHow To Raise Rich Kids\u201d and says she is living out the miracle of compounding with her 15-year-old daughter. <\/p>\n
Together, the pair put in $19.25 a week into the youngster\u2019s super account, with Ms Megginson first transferring her portion into her daughters\u2019 bank account, before it is then moved into super.<\/p>\n
\u201cI did the numbers on it based on averages, an average return of 8 per cent per year,\u201d she said. <\/p>\n
\u201cIf we just did that for five years, from age 15 to 20, if we put in this money, and it worked out that over those five years, we would be contributing $5000 of our money, for her to have this, but with the government co-contributions and the return as it grows, she would have between $40,000 and $45,000 in extra wealth by the time she retires. It\u2019s an incredible amount and it\u2019s a way parents can make a real impact from just $20 a week.\u201d<\/p>\n
More than that, just making kids aware of super and its impact on their lives is critical, Ms Megginson said. <\/p>\n
\u201cStart having conversations with your kids about this stuff early,\u201d she said. <\/p>\n
\u201cSuper is complicated \u2026 I really wish I had known more. In your 20s, the idea of retiring at 65 is so far away, you don\u2019t really engage with it much. But of course, that (your younger years) is the most powerful time. Even if you\u2019re just putting in an extra $5 a week, that can make a huge difference as it compounds.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Superannuation is so often \u201cout of sight \u2013 out of mind\u201d. It builds away slowly in the background…\n","protected":false},"author":2,"featured_media":510448,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[85,2652,12338,138,236175,254091,254084,254089,254081,246,254078,254088,254082,254090,254092,12365,254079,111,139,254093,69,2659,244,254083,245,254085,254087,120408,254080,254086,168832,254077,99242],"class_list":["post-510447","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-australia","tag-australia-and-new-zealand","tag-bank-account","tag-business","tag-concessional-contributions","tag-conservative-fund","tag-conservative-portfolios","tag-duncan-evans","tag-extreme-circumstances","tag-finance","tag-government-co-contributions","tag-growth-fund","tag-health-check","tag-income-insurance","tag-insurance-needs","tag-insurance-policies","tag-investment-profile","tag-new-zealand","tag-newzealand","tag-non-concessional","tag-nz","tag-oceania","tag-personal-finance","tag-personal-finance-guru","tag-personalfinance","tag-real-impact","tag-risk-profiles","tag-sarah-megginson","tag-spousal-contributions","tag-tax-contributions","tag-tax-deduction","tag-way-parents","tag-young-age"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/510447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=510447"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/510447\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/510448"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=510447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=510447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=510447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}