Superannuation, like that drawer full of miscellaneous junk in your bedroom, is probably always at the back of your mind as something you need to sort out.
You know you should put super contributions to the top of your mental to-do list and just get it organised. But you ignore it and get on with your life. Out of sight, out of mind… right?!
But we can’t stress it enough – sorting out your super in your 30s can be seriously beneficial.
By now, you’ve probably got the best superannuation fund for you (and if not there’s still time to change that!). Now’s the time to draw up a long-term retirement savings strategy and stick to it.
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How to choose the best super, how to consolidate your super , how your superannuation is performing and how to turbocharge your super are all things you need to consider.
Start by assessing your life goals
If you’re on the property ladder (or planning to get on there), high fives all round.
Paying down your mortgage should still be a top priority but, depending on your family income and the size of your loan, you may still be able to reduce your mortgage and top up your super at the same time.
Write down what you want to achieve over the next few years and have a budget in place to help you reach these goals.
Take a long hard look at that super fund of yours
Check in with your super and see how it’s getting on. Take a good look at your statement when you get it. i.e. resist the temptation to just file it away.
And what about the fees? Review what they and if they have gone up at all. Jonathan Philpot, from HLB Mann Judd Sydney, says you shouldn’t be paying any more than about 1%pa in fees. Think about whether the fund has the right investment options to meet your needs and have a look at how the fund has performed compared with other similar funds.
If you’re not happy with what you see, it might be time to switch to a new fund…
Get a government top-up for your super
If you’re working part time or have taken time off work and you’re earning less than $51,813, consider making an after-tax contribution to super to get the government co-contribution of up to $500. To get the maximum amount you need to earn less than $36,813 and make a contribution of $1000.
Consider spouse contribution to your super
Sharing is caring, after all.
If you or your partner earn less than $40,000 a year, spousal contributions could be the way to go.
Alman Partners’ Frances Easton agrees it is worth taking advantage of this strategy. “The higher income earner can get a tax offset of 18%. The maximum offset is $540 if you make a post-tax contribution of $3000 to your partner’s super fund,” Easton explains.
^And the spousal contribution can work either way… sexist Jetsons!
Spousal contributions can be a great option when one partner has taken time out of the workforce.
Top up super even when you’re not working
If you’ve taken a career break or time away from the workforce to start a family, you shouldn’t neglect your super, advises Claire Mackay, from Quantum Financial.
“Top up your super before and after any career breaks, or get your spouse to contribute for you [See section above!], Mackay says. “You can also take advantage of the government’s co-contribution.”
That way your super balance doesn’t suffer even if you step away for a while!
Consolidate your super funds
Also known as ‘how to make your life easier 101.’
“If you’ve held a couple of jobs, consolidate your super into one account to save fees, stress and hassle,” says Mackay.
Having just one or two accounts will make it so much easier to keep track of things.
Consider salary sacrifice
Yeah, we get this sounds a bit:
But it could be a great way to maximise that super.
“Salary sacrifice into your super to reduce your tax and to turbocharge your super,” says Mackay.
In a nutshell, this means getting your employer to contribute to your super on your behalf before you are paid.
So, by “sacrificing” some of your before-tax salary and putting it into your super fund, you get taxed at the special rate of 15%. This option is best suited to higher-income earners because they’ll save on tax. Just make sure you stick to the contributions caps…
Don’t forget about super insurance
Even though your fund will have automatically given you some life and Total and Permanent Disability (TPD) insurance, you need to look at whether that amount is enough to protect your family. If not, think about upping the level of cover and also possibly taking out income protection cover as well.
Get financial advice if you’re still unsure
Money matters can still be overwhelming, no matter what stage of like you’re at. Get some professional advise if you’re still not confident going at it alone.
Paying for a financial adviser could save you money in the long-term.
“Consider the cost as an investment in your own education as well as that of your superannuation management,” says Chris Smith, founder of VISIS Private Wealth.
Some advice about how to best structure your finances for the best possible result for your future sounds like a plan we can get behind.
