This is a guest post by Allison Banney – a senior finance writer from finder.com.au.
We all want to enjoy our retirement. Whether it’s travelling overseas or packing up and moving to the coast, what you can do in retirement will be determined by how much super you have saved.
Here are five steps you can follow today to help your super grow
1. Compare funds
Many Australians are still with the fund they received when starting their first job and have never bothered to compare their options. However, not all super funds are created equal, so the fund you choose will have a huge impact on how much you have saved in retirement.
Therefore, the very first step to take if you want to grow your super is to compare your options. Look for a fund with low fees, a solid track record of positive investment returns and a level of insurance that suits your needs.
2. Consolidate accounts
Once you’ve found the right fund for you, the next step is to consolidate your existing accounts so you only have one fund open in your name. For example, you might have opened a second fund as a requirement for a previous job.
The problem with having multiple funds is you’re also paying multiple fees. These fees might seem small on the surface, but paying multiple sets of fees over your entire working life can seriously eat into your savings and result in you retiring with hundreds of thousands of dollars less.
3. Consider your investment options
Low-risk investment options, such as cash and term deposits, will usually have lower investment returns. The investment options that are heavily invested in equities typically have higher returns, though they are also higher risk. These are often referred to as growth options.
If you’re young and just starting your working life, it might be a good idea to consider a high-risk investment strategy for your super, as you have plenty of time to ride the ups and downs of the market. Just make sure you’re comfortable with the level of risk required.
4. Find lost super
This is an easy win if you’re looking to boost your super. It’s been reported that there’s more than $18 billion in lost and unclaimed super floating around, just waiting to be claimed. You might not think you have any missing super, but it’s easier to lose than you may think. If you’ve ever changed jobs, changed addresses, worked overseas or even changed your name, you could have some missing super.
It takes a few minutes to log in to your myGov account online and search for any lost super. The sooner you claim it, the better.
5. Salary sacrifice
Once you’ve compared funds, consolidated accounts, readjusted your investment strategy and claimed any lost super, you can now consider topping up your balance via salary sacrifice. Salary sacrifice is a form of voluntary super contribution that directs a percentage of your pre-taxed income straight into your super.
The primary benefit of salary sacrificing into your super is that the money will be taxed at the lower superannuation tax rate rather than your standard marginal tax rate. Plus, you’re also lowering your overall taxable income in the process, meaning you’ll pay less tax at the end of the financial year.
Your retirement may seem like a long way away, but there are some easy things you can do today that will help your super grow, to ensure you have enough saved to fund your lifestyle when you’re no longer working.
Plenty can help analyse your current superannuation and see if there is a lower cost option out there for you. We can also tell you the most tax effective way to boost your super – get started now.
The information contained on this page is of a general nature and may not be appropriate for your personal circumstances. You should obtain personal financial advice before acting on this information.