Get to know your super
SUPERANNUATION can be a scary phrase, especially for those with forgotten accounts dating back to their first part-time job all those years ago.
And while we are constantly told to roll our super into one fund, Warwick Credit Union CEO Lewis von Stieglitz said that wasn't always the best option.
"Get your financial adviser to look at all the bells and whistles, because you may have ticked the right boxes along the way," Mr von Stieglitz said.
"It can almost be a bit of risk management (having a couple of accounts) because if one is structured in a way to cause it to go down for some reason, then the other might be safe."
He said though it could prove easier to manage by having just one super fund, it was important to see what was right for you.
"Whether you're 18 or 50, you shouldn't let it drop out of mind," Mr von Stieglitz said.
Jason Ball, a financial planner for Bridges Financial Services who offer advice to all Warwick Credit Union customers, said cashflow management was the key to long-term wealth creation.
"There is a famous book titled The Richest Man in Babylon, which outlines saving 10% of your salary each pay period for the future - that is a good start and is relevant today," Mr Ball said.
He said everyone was different in terms of how much they needed to put aside in order to live comfortably come retirement.
"Ask yourself… in today's dollars, how much do I need to live on?" Mr Ball said.
"If the answer is say $50,000 per annum, divide into an assumed income rate of say 6%pa and the answer is $833,333.
"This means you need around $800k net capital in retirement (today's dollars) to generate your desired income without eating into your capital."
In the wake of the Global Financial Crisis, many people are fighting to make ends meet after losing massive amounts of super.
But, Canstar financial analyst Joshua Zenas said the market was back in business.
"The all ordinaries over the past twelve months has increased by 5.62%, which indicates the market is healthy and this can be expected to be reflected in the super funds performance," Mr Zenas said.
As for which super funds Canstar would recommend, Mr Zenas said there were five that stood out.
"We at Canstar have noted First State Super, AMP Flexible Super, Australian Super, Recruitment Super, Sunsuper and Media Super offer five star value across the various life stages," he said.
Jason Ball's top 5 tips
- Take an interest in your super account from day one. This could potentially be the biggest investment asset you will have and a tax free income stream that lasts 20-30 years.
- Know where your funds are invested. If you want more growth over time, you should consider more growth exposure.
- Know your superannuation contribution caps. There is a limit to what can go into super each year. If you go over the limit you may be penalized with excess tax.
- If you can, consider salary sacrifice to ensure more funds are going into super to accelerate your growth over time (bearing in mind your contribution caps).
- Use your super fund to establish suitable levels of life insurance. This will help protect your overall wealth plan and can be done quite cheaply and tax effectively.
