Superannuation Advice to Follow for a Comfortable Retirement
Planning for the future is one of the best ways to protect your income and ensure a comfortable retirement when the time comes. And what better way to plan for the future than to follow superannuation advice from financial experts?
With the right superannuation plan, your hard-earned funds can grow more rapidly due to the favourable tax treatment from your employer. This is an integral aspect of retirement saving, so it’s crucial to compare your options to find the best plan based on your circumstances.
Choosing an appropriate plan can be a daunting task. To alleviate the process, we’ve provided this guide on superannuation advice that can set you up for a successful, comfortable retirement.
What Is Superannuation?
Superannuation is a pension program designed by employers to benefit employees and help them save money for the future. It’s available only to Australians, but it’s very similar to US programs like defined-benefit and defined-contribution plans.
Superannuation starts when monetary contributions are made by the employer, and in some cases, the employee. Depending on the plan, the contributions will grow by a certain percentage each year, and eventually, the employee can withdraw benefits from the fund.
Benefits of Investing in Superannuation
Investing in superannuation comes with a lot of benefits, including:
- Lower fees compared to traditional retirement account options
- Simple features that only provide you with what you need, unless you opt for extra services and bonuses
- Variety of investment choices that allow you to choose your investment type, including self-managed super funds
- Allows you to change employers without losing access to your super funds
- Option for early fund access without penalty due to inability to work from an injury or medical condition
- Guaranteed access to income throughout your retirement period, ensuring you won’t run out of money before you die
Types of Superannuation Plans Available to Australians
As of right now, there are two types of superannuation plans available to Australians. One account type appreciates over time with changing payouts that depend on current market conditions, while the other maintains an exact payout system that’s not based on market fluctuations. These plans include:
- Accumulation Fund
- Defined Benefit Fund
Accumulation Fund
With an accumulation fund, periodic contributions are made so that the fund can grow over time. With smart accumulation fund investment, your money can grow drastically throughout the years, setting you up for a comfortable retirement.
The main thing to remember about this type of superannuation plan is that the more you invest, the more growth you’ll see. Depending on your salary, try to invest a certain percentage of each paycheck for maximum return on investment.
Defined Benefit Fund
A defined benefit superannuation plan is similar to a pension or annuity plan, so it considers the amount of employment time and salary history. Distributed funds are based on a formula that guarantees a specific income amount once withdrawals from the account begin.
Superannuation Advice: Tips for Smart Retirement Saving
Following superannuation advice from a financial expert is one of the best ways to accumulate wealth that’s accessible for retirement. Generally speaking, you’ll want to weigh the required fees and fund performance against other factors such as risk, investment returns, services, and insurance.
But there’s more superannuation advice to follow that can set you up for success, including:
- Pay close attention to your current administration, platform, and fund management fees and determine if cost savings are attainable and in line with your goals
- Review your investment options and their potential for performance
- Review the ability to implement online transactions promptly and your ability to adjust your asset allocation and investment recommendations so you can take advantage of investment opportunities when the market is volatile
- Review your ability to receive ongoing communication and updates regarding transactions made to your portfolio
- Review your ability to monitor cash positions to ensure excess funds can be invested based on the recommendations provided by your financial advisor
- Review your access to investment tools, including
- Term deposits
- Direct shares
- ETFs (Exchange Traded Funds)
- LICs (Listed Investment Companies)
- SMAs (Separately Managed Accounts)
- MDAs (Managed Discretionary Accounts)
- Review your ability to access your superannuation fund online for a full view of your investments
We’ve offered a lot of superannuation advice in this guide, but if you still need help deciding on the right plan and features for you, feel free to get in touch with one of our financial experts for more information on how to successfully save for retirement.
