Whether you’ve monitored your superannuation fund meticulously since the moment you entered the workforce or you’ve only started thinking about it now, there’s still time to get the best super for you.
If you’re looking to sharpen your finance knowledge in general, be sure to check out Bauer’s Financially Fit Females hub.
^ No need to panic!
It’s definitely time to put your foot down and reach the all-important finishing line. And FINALLY get to the bottom of how super works, and what your superannuation contribution rate should be. Now’s the time to turbocharge your super . Here’s how:
Planning your superannuation is more important than ever
“Don’t procrastinate – it’s never ever too late to start planning,” says Claire Mackay, from Quantum Financial.
Think about what you want to achieve, how much debt you may still have to pay off and when you want to retire.
Paying down debt should remain a priority – you really don’t want to enter retirement with a mortgage if you can avoid it.
Think about how much money you actually need to retire
“Estimate what a comfortable level of income would be for you in retirement and ask yourself if your superannuation is on track to meet this income requirement,” advises HLB Mann Judd Sydney’s Jonathan Philpot.
“As a rule of thumb, a sustainable annual income would be no more than 5% of your super balance.”
So let’s say you have $1million, you could comfortably draw down $50,000 a year. If you have $1 million but want $60,000 a year to live on, you really will need to act to boost your super balance.
Re-think your investment strategy
“The most important thing to get right in this age group is gliding your asset allocation into a suitable mix in retirement,” says France Easton, from Alman Partners.
“Many pre-GFC retirees did not understand how aggressive their super was invested. Imagine retiring in 2007 with all of your money in a high-growth portfolio and in your first year of retirement your money halves. Remember to de-risk your asset allocation.”
Before the GFC, many retirees woke up one day to find their super had basically halved as what they had invested in was high risk – learn from their mistakes and diversify your portfolio.
Mackay says you should finetune your super to build a sustainable, income-deriving portfolio that will fund your dream lifestyle through retirement.
Maximise your super contributions
It’s time to put the pedal to the metal and maximise your super contributions (both via pre-tax and after-tax money) – as much as your cash flow allows.
“It is important to take advantage of concessional contribution limits as they can’t be carried forward into future financial years. Your annual limits are lost if not used,” says Philpot.
Understand systematic risk
“This is so important,” says Chris Smith, from VISIS Private Wealth. “You don’t want to sell good assets at bad prices to pay for your living expenses. Ensure your investments align with the time frame you will need to sell them,” he says.
Renew your binding nominations
Morbid? Yes, but remember that to make sure your super goes to the people you want it to go to after you die, you need to have a binding nomination and it needs to be updated every three years to stay valid.
If it’s been a while since you looked at that, make sure you take the time to review it and to ensure nothing has changed.
Get serious about a pension
It’s time to get serious about your transition to retirement (TTR) or pension strategies, says Smith.
“Investigate utilising lump sum withdrawals of unrestricted, non-preserved components to meet pension obligations to minimise tax,” he says.
How’s that insurance looking?
You’ve been used to having a high level of insurance as a must to protect your family but as you get a little older, you may question the need to have such a high level of cover, especially if you have paid off your debt or no longer have any young dependants.
Take the time to think about how much insurance you still need and possibly reduce the sum insured.
