What age should you start thinking about your superannuation?
Have you always desired to further your knowledge and understanding about superannuation? At some stage of our life, we all have to reflect our superannuation throughout our varying stages of life we go through. Superannuation is a vital element when taking care of our finances.
There is no right or wrong answer or definitive age when it comes to the question ‘what age to start thinking about your super?’. Personally, for me the most valuable piece of information I could give would be to make sure you are always thinking about your super…the earlier, the better. The superannuation industry is forever increasing with our ageing population and is going to be funding most people’s retirement when the time comes. From your first job to your retirement day you are going to be contributing to this untouchable, confusing, highly regulated sum of money. No matter what age you enter the workforce you can considerably improve your future position with a few small steps.
Flash back to when you were in your teenage years, who has just landed their first casual job packing groceries or flipping burgers. For me, it was picking up range balls at the local golf course. I would say the majority of us would have been more excited about spending that first pay cheque at the movies and junk food rather than seeing their first super guarantee payments reaching our new super account. Why not? Money in bank you can spend, inform a teenager they can’t touch their super until the age 60 and they will roll their eyes and make some remark about how the system isn’t beneficial for them. For most first jobs this system is fine. The first step you take is to be set up with a simple cost-effective employer fund with all the default options chosen by that employer.
This process gets complicated once you have left your first job and started another job. In some cases, a few in the first couple of years. This may have been a smooth transition, for some of us who were active in keeping your super details and providing them to your new employer. Whereas, some of us simply did not know how or cared to do so. This starts with an unstoppable wave of multiple superannuation accounts which returns for the young investor with multiple sets of fees, multiple default insurances and a lack of knowledge about where all the superannuation and insurances are located.
Fast forward a few years after high school or university when you start your first full-time job career. Whether this is an apprenticeship or any other full-time work. This is the age where we should be learning more about the features, benefits and functionality of the superannuation system. Through this new working environment followed by a constant inflow of money into our super, this is us as investors should at a minimum ensure all of the finances are together in one fund and invested as per our requests. This is as simple as conducting a lost super search through the ATO and finding all those accounts you have accumulated over the years.
Skip ahead a few more years when you are in your thirties or forties, your wealth is increasing and your super balance starts to become stronger. This is usually the time in your life when you are dealing with your largest amount of debt, kids, school fees, trying to take holidays and juggle work all at the same time. This can be very easy to forget about this untouchable sum of money as retirement still seems very distant. These are the years where I think this is most vital to be actively involved with your super. You can do this by either looking at your investment strategy to make sure you are exposed to your required amount of growth assets and to look at contributions to see if your super guarantee from your employer will provide you with enough inclusions. Fine-tuning a few changes to your account could make a big difference over the 20 to 30 years you have of your working life left.
Now we are at our pre-retirement stage, for some of us this is in our mid-fifties and for others early sixties. This is the time where super becomes very relevant to us as we start to think about the lifestyle we would like in retirement and compare this to the current savings we have. A daunting exercise I know. At this point we have to prioritise by ensuring we feel comfortable with the investment strategy and if needed increase the balance with extra contributions. Whatever your goal for your superannuation may be, now is the time to get it sorted and get ready for retirement.
Once we hand in that letter of resignation, sell the business or sometimes take the redundancy we become dependent on our super savings as this is the structure of our income that we need to survive. From the stem of our teenage years of not giving this much thought, it is now in the forefront of our mind every day as we have no choice. This is where we put into practice everything we have learnt along the way by planning the way we spend and utilise our money.
Through our life stages there is always something that we should be doing to keep up to date with our super and to make sure we are maximising the funds that are within. On the super scheme, regulatory changes have the biggest impact. Every couple of years there have been moderate changes. How do we ensure that we are doing the right things? Since the beginning, financial planners have been helping people with their retirement savings. It is our job to be up to date with all the legislative changes and strategies that will make the most out of your situation.
If you feel as though this area is too overwhelming or you aren’t sure of what to do or too time poor, then come see one of us at Oak Financial Planning as we would be pleased to help you on your journey.
Written by Travis Baldock, Financial Planner on behalf of Oak Financial Planning.
Travis has studied a Bachelor of Business majoring in Financial Risk Management. He plans on undertaking further study in the future to complete his Masters of Financial Planning and his SMSF accreditation.
Travis is passionate about Financial Planning and values building on personalised strong client relationships.
Oak Financial Planning Pty Ltd ABN 78 126 751 335, trading as Oak Financial Planning is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licence and Australian Credit Licence 232706.
This blog article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, Travis Baldock, Oak Financial Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.