We"ve put together a list of the things you could be doing right now in your 20s to help make sure your retirement is as financially comfortable as possible. Plan now for peace of mind that you will have a comfortable
retirement for the future.
Exercise your right to choose
One way you can take control of your finances is by choosing where your Australian superannuation is invested. You can choose the superannuation fund in which your contributions are made into, as well as the type of investment you"re in. Your financial planner in Australia will help recommend the best Australian super fund that suits your investment needs and financial goals.
Consolidate all superannuation accounts into one
Don"t burden yourself with multiple fees and paperwork by having multiple superannuation funds. If you have old super accounts you no longer use, you"re still paying for it by doubling up on account fees and charges. It"s not hard to consolidate our super funds. Your financial advisor in Australia can help you consolidate your super into one account. Easy!
Change jobs, not your super fund
If you"re changing jobs, or have more than one job, you don"t have to change super funds or set up another account. Just tell your new employer which account you want your super contributions to be put into.
Let the Australian government give you a boost
If your total annual income is less than $31,920 pa and you put in at least $1,000 of your own (after tax) money into your superannuation, you could be entitled to a free $1,000 boost from the Australian government. Even if you earn more than this "" up to $61,920 pa "" you could still be eligible to earn some benefits. You can put in less than $1,000 and still get a reward. The scheme is also extended to self-employed people.
To find out more about the Australian government co-contributions and other tax benefits you could be entitled to with your superannuation in Australia, speak to our Brisbane financial planners on +61 7 3624 1900.
Sacrifice a little now and suffer less pain later
Super could be the most tax effective investment you will ever have because it"s not only about saving for retirement, it"s also a place where you can hold your money and pay low to zero tax. Paying some of your own money into super through salary sacrifice is also an effective way of paying less tax and growing your super at the same time.
Your financial planner in Australia can provide you with more information about salary sacrificing and whether this is the best option for you based on your needs and circumstances.
Understand the power of time
The beauty of compounding interest (earning interest on your interest) means that small amounts contributed over time will exponentially increase the size of your nest egg.
For example, if you"re single, aged 25 and planning for retirement at 65 years of age, with an income of $37,000 pa, if you start from a $0 balance, we estimate that you"ll need to be saving around $9,000 a year to reach your target. This amount includes the contributions your employer is putting away for you with the remainder paid as salary sacrifice. But if you were 45 now and planning to retire at 65 with an income from your super at $37,000 a year, you would need to put away $25,000 a year to reach your target. If you were 55, you would need to put away $59,000 a year. That"s a massive difference! You can see that by starting early and saving a little at a time will save you a lot of potential pain later in life.
Protect yourself
Life insurance is unlikely to be a big priority if you have no dependants, but income protection insurance is important regardless of your age. What would happen if you were unable to work? Who would pay for your food, clothing and utilities? If you"ve got a young family, who would support them if something happened to you? You might have a savings account, but is this enough to cover all your expenses?
Income protection insurance provides you with an income if you are unable to work because of injury or illness.
If you are thinking of getting life insurance or income protection, speak to one of our Australian financial planners first "" they can help research and compare all the various insurance policies on the market and find one that suits your needs and circumstances.
