Generally, superannuation is the last thing on our minds. But it pays (literally) to be smart and follow these simple steps to save more super. And as Carol McKelson-Timmins says, “The good news is that it’s never too late to start”.
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What can you do to secure your future?
1. Roll multiple super accounts into one
Carol McKelson-Timmins: “It’s very simple and sometimes an obvious point, but it’s amazing how many women have multiple super accounts each being hit by individual fees. These could be rolled into a single account”.
2. Start saving as early as you can
Carol McKelson-Timmins: “One word: compounding.”
“Put very simply, compounding is where you earn money on the total balance of your account. That means your savings builds on itself – earnings are added to earnings. This has a multiplying effect, increasing at a faster and faster rate over time. It’s what Albert Einstein called the “most powerful force in the universe”.
3. Be proactive
Women often struggle to accumulate super because many take breaks in their working lives to have children or care for family members. Many may also never return to fulltime work.
“Don’t despair,” says Carol. “There are things you can do to boost your wealth.”
Personal after-tax contributions, either through regular small payments or a one-off contribution, can really boost your savings.
Salary sacrificing is another option to consider. Carol says, “If you make contributions from your pre-tax salary, you can reduce the amount of tax you pay on your take home salary while boosting your super.”
4. Take advantage of freebies
If you earn less than $61,920 a year and make an after tax contribution to your super, you may be eligible to receive a co-contribution from the government. Depending on your eligibility, this could be a matching of up to $1000, Carol says.
5. Review your situation
There are ways to make your money work harder for you just by fine-tuning the details of your investment. Depending on what stage of life you are in, you may choose to take more of an aggressive approach to investing, or if you are getting nearer to retirement, a more conservative approach might work.
“It’s all about accepting risk,” Carol says. “For those at the start of their super journey, they can afford to take a few more risks and may choose to invest in more ‘high risk’ options, which could result in better returns. For those who need to take their money out sooner, choosing safer investments which provide a steady return may be the way to go.”
“There are super funds which can automatically switch your investments into options depending on your stage of life, or you can manage them yourself and take a more active role in your investments.”
Carol McKelson-Timmins’ Super Health Checklist
1. Work out how much super you’ll need to retire on. Use your fund’s web calculators to help you work this out.
2. Roll your super into one account.
3. Start saving early to make the most of compound interest.
4. If you start saving later in life, find out if you can salary sacrifice to receive tax benefits and boost super savings.
5. Consider making voluntary contributions to increase your savings. You may also receive a government co-contribution of up to $1000.
6. Review your investment for your stage of life. If you are younger, it might be worth taking a more aggressive approach to your super investments.