Is your super on track?
Knowing whether or not your super is on track can be the difference between enjoying a comfortable retirement and having to live well within your means.
But sometimes it can be difficult to figure out how your super’s tracking. We’re going to run you through some tips and tricks to ensure your super is on the right target. By being able to monitor the health of your money, you can identify any causes for concern.
How much is enough?
While you’ve been making contributions to your nest egg, it can be a little difficult to figure out whether or not this is actually going to be enough.
Citing figures from the Association of Superannuation Funds of Australia (ASFA) December Quarter Retirement Standard, the Australian Securities and Investment Commission’s (ASIC) Money Smart Blog states Australians should, “Assume you need 67% (two-thirds) of your income before you retire in order to maintain the same standard of living in retirement. This estimate is only suitable for above average income earners. ASFA estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial Age Pension. ASFA also estimates that because a modest lifestyle is mostly met by the Age Pension the lump sum required to support it for a couple is $35,000 ($50,000 for a single person).”
As superannuation fund Equip also notes, the amount of super that you will need, “Depends on your lifestyle and on how long your money needs to last. At age 65, people have a good chance to live well into their 90s!” To figure out whether you’re close to the mark, Equip has provided a free online super calculator, to help so how your money is tracking.
What do I do next?
Well, if you’ve crunched the numbers and feel as though your super is not going to be sufficient, you have a couple of options. Instead of leaping straight into the great unknown of retirement, these lifestyle-savings strategies can help make the transition smoother.
- Increase your contributions – If you’re still working and in the position to do so, most superfunds allow members to increase the amount of super they’re contributing, to help prop up the size of your nest egg when you retire.
- Diversify your risk – Many superannuation funds allow you to tailor your investment so you can diversify the amount of risk you’re taking on. While this is a potentially risky strategy, it can see you increase your amount of super if it pays off.
- Work for longer – This is a tough one to consider, and not everyone is in a position to contemplate this, but in many case working an extra couple of years can go a long way to securing a high quality of life in your retirement.
Do you think your super is on track? Do you feel like there’s enough information out there to help soon to be retirees figure this out?
Let us know in the comments.
Equip manages $7 billion of investments for members working across a wide range of Australian industry sectors. This superannuation fund has been providing strong investment performance and has been a reliable provider of retirement benefits for over 80 years.
Related links:
Super is changing. Should I be concerned?
How to make retirement income go the distance
Poll suggests bleak retirement outlook for baby boomers