Whether retirement is a far-off dream, or already a reality, you’ll no doubt have thought about how you plan to fund those years. By the time we retire, some of us will have managed to accumulate a healthy chunk of superannuation – and a few will also be entitled to a government pension to cover basic expenses. But whatever your situation (or your plans) there are some tactics that you can use to stay on the front foot, and end up with enough to be comfortable.
Make your super work for you
When we’re young we don’t tend to think much about super – it’s a ‘later’ thing, right? But it’s actually never too soon to get super savvy. That means being aware of how much your contributing, and how your money is being invested.
If you’ve had a few jobs (a fact of life for most millennials these days) you may have collected a few different super funds. Getting these consolidated is the first (and possibly the easiest) way to make your super work harder. After all, multiple super funds mean multiple sets of fees and charges, and no one wants that. The good news: you don’t have to be Sherlock Holmes to track down your super – with the help of the ASICs MoneySmart site, it shouldn’t be hard to find.
Once you’ve got all your super together, you can decide where you want to put it. Pick a fund that offers you value for money and the features you actually need. From there, you can just continue making contributions and watch your balance grow.
A word on super contributions: while it’s mandatory for your employer to contribute 9.5% of your salary, you can make extra contributions too. Salary sacrificing can be a tax efficient way to do this – essentially it means you make deposits into your super fund directly from your pre-tax pay (which may mean you pay less tax).
Look at other investments
Super is a particularly efficient retirement savings vehicle, but it’s not the be-all and end-all. You might want to look at other ways to generate an income throughout your retirement – for example, listed property funds, shares or cash deposits. Some people prefer to diversify their investments, as it can help to protect wealth at times when one specific asset class is underperforming. It’s worth checking to see what options your super fund offers you to help you diversify your investment portfolio within super, too.
Be space savvy
Other ways to keep the money coming in post-retirement could include selling the family home or getting a reverse mortgage. If you’re rattling around in a big place you no longer need, downsizing may help you access cash to invest in other ways (or fund your lifestyle). Just a note on downsizing though: it can incur additional costs and affect your eligibility for potential government benefits and in addition there can certain tax consequences.
Keep on keepin’ on
If you’re actually happy to keep working a bit longer, delaying retirement could help your super last longer when you do finally access it. Another option is to take part-time employment while drawing an income from a Transition to Retirement account. This could give you the best of both worlds: you reduce your working hours, and top up your income with your super, while still making contributions to your super in a tax-efficient way which leaves room for you to grow your balance further.
Get some expert guidance
Wealth building for retirement may feel less daunting once you take control of your super. Why not chat to a financial adviser to see whether your super will have you on track for a comfortable retirement, and explore different ways to give yourself a boost? ING DIRECT can help you get started – if you open a Living Super account, you’ll get a complimentary session of single-issue advice with a qualified Money Coach from Link Advice (worth $330). Call 133 464 to find out more.