With the quieter summer holiday upon us, now might be a good time to make some super simple changes that could make a lifetime of difference in retirement.
In the YourLifeChoices’ Retirement Income and Financial Literacy Survey, almost three-quarters of all respondents were convinced or unsure that their retirement savings would not last.
According to Industry Super Australia head of research Dr Nick Coates there are five easy steps that you can take now that will boost retirement savings.
“There are five easy tips to getting your super right and most can be done from the comfort of your deck chair, beach towel or at home,” Dr Coates explained.
“Check you are being properly paid super, consolidate accounts, compare funds, select the right investment mix and make small contributions.
“With the Super Guarantee set to rise to 12 per cent it is even more important tomake sure you are getting paid your full legal entitlement and that the fund is working for you.”
Dr Coates’ five steps to boost your retirement savings are:
1. Check with your fund to make sure you are being paid your full legal super entitlements. Unpaid superannuation impacts one in three workers and while most bosses do the right thing, there are still some employers who deliberately rip off workers, he says. And with the super guarantee rate legislated to start increasing next year it will soon be even more important to check that the full amount is being paid.
2. Consolidate your super funds into one account; finding lost or unpaid super is simple now using the Australian Tax Office tools.
3. Compare your existing super fund with others in the market to make sure it is meeting your needs. Fees and investment performance are important factors to consider. Remember, long-term returns are what matters. Compare funds over five years or more. Dr Coates says that being a member of an Industry Super Fund puts you ahead of the others because of their low fees and strong performance history (of course remember that past performance is not a reliable indicator of future performance). The Productivity Commission found underperforming funds can cost members up to $500,000 in savings when they retire. This could be the difference between retiring at 65 or 67.
4. Make sure the type of fund is right for you. Choosing your super investment strategy is like making the perfect beach cocktail – you need to get the mix right. Make sure the investment strategy matches your needs and appetite for risk – which your fund can help you with. Also be sure to check the insurance coverage is the right fit for you and your family.
5. If you get some type of windfall, consider putting it in your super fund. It is a tax-effective way to make savings and with the powers of compounding interest, a little invested in super now makes a big difference in retirement, says Dr Coates.
What steps have you taken to boost your retirement savings?
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