How much super should I have? - Newcastle Financial Planning Group
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How much super should I have?

3 ways you can boost your super balance to secure your retirement

A healthy superannuation balance is key to a successful, secure retirement. But did you know that there is a big gap between how much super Australians have and how much super they need for a comfortable retirement?

Whether you’ve just started to earn a decent income or are approaching your retirement years, it’s important to pay attention to your super balance and know whether it will be enough to support you for your future.

If you’re looking at your super balance and wondering how it compares to others, you’re not alone.

In fact, you’re ahead of the game. According to finance research leaders, Canstar, 40% of Australians don’t know how much super they currently have1.

So, if you’ve got a real number, well done: that’s step #1.

Step #2 is knowing what that number means because when it comes to your superannuation and retirement income, knowledge is power. Understanding your financial situation can help you on your way to retire the right way.

So, what does your super number mean? Are you on track to have a happy retirement or do you need to start thinking of ways you can boost your income?

How does your super balance stack up?

According to Canstar, here’s the recommended super balance you should have for a comfortable retirement based on your age group.

Age Recommended super balance required for comfortable retirement
30 $54,000
40 $143,000
50 $257,000
60 $415,000

If your super account balance is looking a little low, you’re not the only one. The average super balance in Australia is far lower than it should be.

But that doesn’t mean you can just chuck your under-funded super account in the ‘too-hard basket’, or you will likely face the consequences when your retirement day comes.

Can’t I just use the Age Pension to fund my retirement?

Is the Age Pension running around in your head right now?

The Age Pension is a great income source for retirees who meet the eligibility requirements. However, it is unlikely to be enough to support you for retirement.

The Age Pension provides $24,100 per year while a comfortable retirement requires $43,587 per year according to the Association of Superannuation Funds of Australia2.

Avoiding your super problems today is something you’ll likely regret in the future when you want to retire but can’t afford to.

If your super balance needs some tender, love and care, here are some potential ways that you can boost your balance to secure your future.

3 quick, easy ways to boost your super balance:

1. Make extra super contributions

Any voluntary super contribution you make will benefit you in the long-term. Here are some super contribution options you could utilise to prepare for retirement while making the most of your money:

  1. Salary Sacrificing: you can ask your payroll to pay part of your pre-tax income into your super account which can be a tax-effective way to grow your super
  2. After-tax Super Contributions: You can make after-tax payments to your super that do not get taxed as you have already paid tax from your salary.
  3. Government co-contributions: Depending on your salary and your existing super payments, you may be eligible for an equal contribution from the government. Find out more on the ATO website.

Making extra super contributions is a great way to grow your super. However, there are limits and processes that you should follow to ensure you are making the most out of your money.

At NFPG, we can support you with personalised financial advice based on your circumstances. We can help you understand how to make the most effective contributions to your super account to best prepare you for your perfect semi-retirement.

2. Reduce your super fees

You can reduce your super fees by searching for duplicate accounts or by switching your super into a fund with lower fees.

Did you know? Approximately 6 million Australians hold two or more super accounts with some people having more than 6 accounts.3

Holding more than one super account means you are paying extra fees that are eating away at your retirement savings. How many accounts do you have?

3. Change the way your super is invested

You could consider changing the way your super is invested. According to MoneySmart, there are four main investment options for your super:

  • Growth: Aims for higher average returns over the long term. This also means higher losses in bad years than those you would experience with lower-risk options.
  • Balanced: Aims for reasonable returns, but less than growth funds to reduce risk of losses in bad years. Those losses usually occur less frequently than in the growth option.
  • Conservative: Aims to reduce the risk of loss and therefore accepts a lower return over the long term. There is less chance of having a bad year than in the balanced or growth options.
  • Cash: Aims to guarantee your capital and accumulated earnings cannot be reduced by losses on investments.

 Want some help to grow your super balance?

Are you worried that you won’t have enough super for your retirement?

At NFPG, our Financial Advisers can help you better understand your super balance, how you can grow your savings, and build a personalised retirement strategy to help secure your future.

We believe everybody deserves to enjoy their retirement the way they want, and it is our mission to help you enjoy yours.

Contact us today for a complimentary initial consultation. We have offices located in Newcastle – The Junction (NFPG), Central Coast – Erina (CCFPG) and  Sydney CBD (SWA).

 

REFERENCES:
1 https://www.canstar.com.au/superannuation/2-in-5-australians-dont-know-how-much-super-they-have/
2 Association of Superannuation Funds of Australia (ASFA) Retirement Standard June 2020. Available from https://www.amp.com.au/retirement/prepare-to-retire/retirement-money-needs
https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Multiple-super-accounts-data/

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

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