It’s very easy to push our Super to the side as we are going on with our busy lives. There are so many financial tasks to deal with normally that adding Superannuation to that list seems like a chore. Many of us are in a stage of life where super is “just a thing you have to deal with when you are older”. But when we do inevitably get closer to retirement, we will become increasingly annoyed by our younger selves’ flippant attitude towards super.
So why not do something about it now? Spend some time to sit down and look over your super every now and then. Ask yourself the following questions and determine whether your Super is growing nicely.
Is your current Super right for you?
Many people when they start a new job simply go through their employer’s Super Fund. This often results in you having many different Super Funds from each of your previous employers continuing to charge you account keeping fees straight from your retirement savings. Ouch! If this is your situation you should merge your accounts. It will reduce costs and save your retirement in the long term.
A lot of people also use a single Super Fund. However, it is important to shop around before committing to a single Fund. You need to take a look at what they offer, question whether the super is right for you, whether they suit your needs. Ensuring that your Superannuation Fund is meeting your needs and isn’t charging you ludicrous amounts for extras you do not need, is an important step in securing your retirement.
To help you decide here are the top six, rated by Canstar, best performing Super Funds (with a seven year return on average):
1. Catholic Super +11.43
2. Australian Super +10.73
3. Cbus Super +10.56
4. Sun Super +10.24
5. Care Super Employee Plan +10.01
6. In-Trust Super Core Super +9.99
Are your records up to date?
In 2018 the ATO revealed that $17.5 billion in lost Super was yet to be claimed. A lot of this was due to people not updating their records or merging their Super Funds. It is vital that you always keep your statements, beneficiaries and personal details up to date. If anything in your life changes so too should your details. If you change jobs, residences, spouses, have kids or more, you should ensure that your records are up to date. You could be throwing money down the drain if they aren’t.
Start by consolidating your Super into one account if you haven’t already. Separate accounts means higher fees which results in your hard earned cash drying up before you reach retirement.
Adjust your contributions/salary sacrifice/ beneficiaries
Salary Sacrificing can have many benefits for those looking to boost their Super or take advantage of the First Home Super Saver Scheme (FHSSS). It is important that you ensure that you understand the limits of the FHSSS, and how to adjust your salary.
If you are salary sacrificing for the FHSSS it is important to understand that you can only withdraw up to $30k for singles and $60k for couples from voluntary contributions to your Super for a down payment on a house. You must make at least $15k per year in voluntary contributions into your super before you can withdraw this amount to help save for a deposit on your first home. The reason many choose to take advantage of this scheme is favourable tax treatment. It is much faster to grow your deposit due to the tax treatment Super receives. You can also potentially reduce the amount of tax you pay. For more information on this scheme talk to your accountant.
You should also consider reviewing your insurance cover and beneficiaries. In order to ensure that you continue to receive income protection, injury cover, funeral insurance and life insurance, you should update them regularly. While updating them you should also review what you are being covered for. Make sure that it suits your current circumstances.
Are you benefiting from tax relief?
When you voluntarily contribute extra funds to your Super you could be eligible for a tax deduction which allows you to claim this back on your tax return. If you contribute $25k per financial year, for example, you’ll be taxed 15%. So, you will likely be able to get most of that amount back in your return. Contact your Super Fund to have your Super Contributions be tax deducted.
For most business owners you have a lot of important financial decisions to make before you can even look into your super. Managing your personal finances and the finances of your business will take up a lot of time. But it is still important to look at your Super Fund to ensure that your retirement is safe.
To help take the pressure off managing both your personal finances and your business’ talk to Link Strategies. We are bookkeepers who specialise in growing businesses, which helps business owners find more time. Find out how we can help you today.