Super guide

Superannuation is an important financial strategy in your retirement plan. It is a long term investment as you generally can’t access your super until you are at least 55 years old. Here are some reasons why you should care about your super, no matter what your age.

Your super choices

Until only a few years ago an employer would chose the fund for their employees. But now, Australians can choose their super fund. There are hundreds of options so making the right choice can be hard to do alone. Your Bernie Lewis financial adviser will help you understand your options and advise you of the right super choice.

How much super is enough?

This is a great question and one that many people don't ask themselves. You need to consider the type of lifestyle you want in retirement and what your "to do list" looks like. This will help you work out how much income you need to fund your lifestyle in retirement and, ultimately, how much super or self funding you need. You can’t do all these wonderful things unless you have the money.

Only a few years ago two-fifths (1.9 million) of people aged 45 years or over were retired in Australia. About 310,000 of these people returned to work in 2007 and the most common reason was due to financial need. They didn’t have enough money to fund all their years of retirement and the lifestyle they were hoping to enjoy.

The Government Aged Pension is about half the amount that a couple need to live a comfortable lifestyle in retirement, which is the most common source of personal income for retirees. Superannuation is the second most common income stream and a very important one at that.

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Over the past few years the Federal Government has encouraged Australians to invest more into their superannuation by introducing co-contributions, salary sacrificing, transition to retirement incentives and a simplification of the system generally. The Government is focusing on super more, recently introducing a proposed increase to the Superannuation Guarantee rate from nine percent to 12 percent over a seven year period.

But are these initiatives enough? The proposed increase to the Superannuation Guarantee rate for example, means that by 2019 a person earning $50,000 per year will add an extra $1500 p.a. to their super under this scheme. This is a bonus but it’s not enough for retirement. Remember we need to self fund our superannuation or retirement fund too as we’ll need at least $671,000 in super for a couple living the average 20 year retirement.

There are many ways you can increase your super. Depending on your current age, planned retirement age and retirement lifestyle will depend on the strategies that are right for you. Your Bernie Lewis financial adviser can discuss your super choices and appropriate solutions with you.