Give your super a health check

How's that superannuation of yours looking? Follow these six steps to ensure you retire comfortably.
Old couple

MANY of us aren’t very diligent when it comes to getting regular health checks and we’re even worse at looking after the wellbeing of our superannuation. Unfortunately for many people, the diagnosis that they don’t have enough super often comes way too late.

With early intervention, it is possible to resuscitate our retirement nest egg. It doesn’t have to be an invasive procedure — it simply involves giving your super regular check-ups and taking a few simple preventative measures now.

Seek early diagnosis:

It’s important to look for early warning signs that your super might not be in good shape, rather than get a nasty shock when you reach retirement age. Firstly, get your superannuation statement out and check how much you have. Consider the lifestyle you want and work out exactly how much you will need to live off once you retire. Make sure you accurately account for living expenses and budget for additional costs such as buying a new car or overseas travel. The Federal Government has a useful online retirement calculator on their Money Smart website which is simple to use and will help you get out of neutral and into gear.

Get a second opinion:

After you have used the calculator, if you’re unsure about how much super you will need, it’s always a good idea to seek advice from a qualified financial planner. They can more accurately project how much your nest egg will be at retirement age taking into account other assets, discuss the real costs of living and help you work out whether you should be tipping more into your superannuation to achieve your financial goals. They will also advise on the best strategies that are available.

Take a holistic approach:

On average Australians have 3.5 super accounts each, wasting as much as $1.1 billion a year in unnecessary fees. The Australian Tax Office’s Super Seeker service is available on the Money Smart website and can help you track your missing super. Once you’ve found it, consider consolidating all your funds into one single account to keep fees to a minimum. Before rolling any super over, it’s important to consider whether you might be giving up any insurance cover, which you may no longer be able to get at your current age and health. A financial planner can assist in making those comparisons for you.

Give your super a booster shot:

While your employer must contribute the 9 per cent Government Super Guarantee, it can be a good idea to top up your super by salary sacrificing. According to recent statistics, the average super balance for women is just $29,692 and $54,061 for men, which is way below the recommended levels. Depending on how much you can afford, try to put another 2-5 per cent of your income into your super fund. Lower income earners should also make the most of the government co-contribution scheme.

Do regular checks:

Don’t take a set and forget approach. It’s vital to review your superannuation at least once a year and check you’re on track to reaching your goals. The below table from the Federal Government’s Money Smart website will give you an idea of how much you will need, depending on whether you want to live a modest or comfortable lifestyle. The figures are based on people retiring at age 65 who will live to an average life expectancy of about 85.

But of course the most accurate way to determine your estimated cost of living in retirement is to put the kettle on, sit down at the kitchen table and do a budget.

Dianne Charman is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.

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