Have you ever pictured yourself enjoying a life of leisure in retirement, travelling to new places, spending quality time with your loved ones, or simply relaxing?
While retirement may seem far off for those just starting their careers, it's never too early to start planning. One of the essential components to achieving a comfortable retirement is through your superannuation. In this article, we'll cover the basics of superannuation and how it can help you create the future you envision.
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What is superannuation?
Superannuation, also known as 'super', is a way for Aussies to save money for retirement. Building a healthy super balance is one of the best ways to enjoy a comfortable lifestyle in retirement, with the little luxuries and fun you've always dreamed of.
While working, your employer must pay a percentage of your salary into the super fund of your choice. This is known as the Superannuation Guarantee. Currently, the minimum Super Guarantee is set at 10.5% of your ordinary time earnings, but this is legislated to increase incrementally to 12% by July 2025.
When it comes to eligibility for super payments, the rules are simple: your employer must pay super if you are over 18. Whether you're a casual, part-time, or full-time employee doesn't matter. If you're under 18, employers must pay super if you work more than 30 hours per week. Generally, your fund holds your super until you retire from the workforce and have reached the 'preservation age'. This varies between 55 and 60 years old, depending on when you were born.
What do super funds do?
Your super fund is responsible for safeguarding and optimising your superannuation until you can access it.
Super funds typically invest in various assets to grow their members' balances, including cash, shares, property and fixed interest. Each asset type has a different risk and return level – so it's essential to check the various investment options and decide what's right for you.
How do I choose a super fund?
You generally have the right to choose your super fund. It's a good idea to spend some time researching, as selecting the right fund can make a big difference to your balance when you retire.
It's particularly important to look at the fund's performance and fees, as these will directly impact your savings. But you may also want to consider insurance, other services like financial advice, investment options, and the fund's attitude towards responsible investment.
How can I grow my super?
The more you can do to maximise your super, the better your position will be when you retire. There are a few things you can do:
- Check your fund's net benefit. The net benefit is the amount of money that actually ends up in your super account once fees and costs have been deducted from your investment earnings.
- Make additional contributions. Boost your balance by making voluntary payments above and beyond your employer's contributions, though be aware there are caps on the amount you can contribute
- Consolidate your super. If you've changed jobs in the past, you may have more than one super fund. By consolidating your super into a single account, you can avoid paying two or more sets of fees.
- Consider your investment options. A high-growth investment option may help you build your balance if you are young. However, it's important to weigh the risks and your specific situation carefully.
Consider getting financial advice before you make a decision.
Wherever you are in life, your super is one of the best ways to give your future self a financial boost.
The information in this article is accurate at the time of publication.
This information is general advice which does not take into account your personal financial objectives, situation or needs. Before making a decision about Vision Super, you should think about your financial requirements and consider the relevant Product Disclosure Statement and Target Market Determination issued by Vision Super Pty Ltd ABN 50 082 924 561 AFSL 225054.