How Healthy Is Your Super

For plenty of young Australians, superannuation is the last thing on their mind.

But a years-long pandemic combined with rising inflation and consecutive interest-rate rises has created a challenging economic outlook.

And with millions of Australians withdrawing billions of dollars of their super during COVID-19, the prospect of a comfortable retirement looks even further out of reach.

What will you actually need to be comfortable?

👌 Thankfully, future-proofing your life is still possible – as long as you start strategising today in order to fund your future retirement.

Here’s how you can grow your superannuation and live the life you deserve after decades of hard work.

The general consensus is you’ll need at least two-thirds of your pre-retirement income (and your house paid off) to live a comparable lifestyle after retiring.
There’s more than $13.8 billion in lost and unclaimed superannuation – could you be missing some hard-earned super?
If your super isn’t performing as you need it to, consider whether switching funds or setting up an SMSF might be more beneficial for your future.

The state of superannuation in Australia

There’s a treasure trove of cash stashed away in Australians’ super accounts – totalling $3.3 trillion at the end of the June 2022 quarter. But that’s actually a 0.5% decrease from 12 months prior, thanks to a number of national and global financial factors impacting the markets.

That’s how much all Aussies combined have in their super funds, but how much should you have for when you retire?

💰 The latest AFSA Retirement Standard recommends couples need $66,725 and singles need $47,383 every year in order to live a “comfortable” retirement. But remember, what’s comfortable for the average person might not be comfortable for you.

👍 A good rule of thumb is to have two-thirds of your retirement income in order to maintain the same standard of living after retirement. But you also need to own your own home.

💵 Making extra concessional contributions (up to $27,500 for FY22–23) can help grow your retirement wealth. And don’t forget the benefits of compound interest on your savings!

Be aware: Raiding your super early can leave you short-changed when it comes time to retire.

Over the past three years, Aussies have pulled out almost $1.6 billion from their super to cover medical treatments.
Getting adequate health cover can eliminate the need to pull from your retirement savings.

Your top five questions answered

1. How much is enough for a comfortable retirement? The simple fact is that your lifestyle leading up to retirement will dictate how much you need to live comfortably – or modestly – in your golden years.

2. What kind of retirement do you want? Are you keen to travel the world in luxury after you’ve retired, or would you be happy with just having enough for a nice meal out every month? Using a retirement planner calculator

3. How can I contribute more?

Are you able to make extra contributions to your super, such as through a salary-sacrifice arrangement at work?

4. How do I find my missing super? You can do a simple search to see if you are owed any money.

5. Is my fund performing to expectations?

Plenty of Aussies have seen their super savings drop over the past financial year.

As Alex Dunnin, Executive Director of Rainmaker Information, told ABC News, “For a 50-year-old with a balance averaging around $150,000, the 2.8% loss equates to $4,200. [But] for people about to retire, these figures may be worse.”

So consider whether switching to a better-performing fund or even creating your own self-managed super fund (SMSF) could be beneficial over the long term.

The bottom line

When it comes to superannuation, the buck stops with you. It’s easy to set-and-forget, but you can maximise your retirement savings if you take more control over growing your super wealth. Here are some things to watch out for:

Make sure your employer is paying you the right amount of super each pay cycle (the Labor government has plans to crack down on dodgy employers). The Super Guarantee has risen to 10.5% for FY22–23, so check your pay stubs carefully!
Find out where your super is being invested. Speak to your fund and see if their investment decisions align with your financial targets for retirement.
If things aren’t going to plan, don’t be afraid to make a switch. Whether it’s changing your investment options with the same fund or switching super providers entirely – it’s your retirement savings, so you should be in control of how it grows.