Financial health check: Five superannuation questions to ask - Women's Agenda

Financial health check: Five superannuation questions to ask

Most Australians will by now have heard about potential reforms to superannuation. We don’t always like change, whether big or small, and can be quick to react negatively without taking the time to go into the details.

Generally, I see the recent changes around superannuation as quite conservative, so forgive me if I don’t get on my high horse in support of those with very healthy super fund balances who under the reforms could soon be paying 15% tax on any earnings above $100,000 for a fund balance of $2 million or more.

More than two decades ago superannuation was implemented as an inflation control device and then in the 90’s it became compulsory, creating a crucial control to ensure we shift the retirement burden away from draining government coffers. In my opinion it has also been operating as an open ended tax break to the wealthy and I have questioned this for some time.

So will you have enough savings to fund your lifestyle in retirement?
The unfortunate reality is that present and future governments are going to tinker with the superannuation framework, so the question we need to ask ourselves is: are we just going to use the “hope and pray” method when it comes to our future or take steps to ensure we have the money for a wonderful retirement? As with anything, taking control of your money is not hard when you know how.

That starts with understanding your superannuation. Below are five questions to consider:

  1. How much money will you need to retire? Most people can’t answer this question. But how can you plan your future when you have no idea whether you are going to be able to pay for it? The government site Money Smart has a retirement planning calculator to help you work this out.
  2. Do you know your current super balance, and how often do you check up to find out how much your balance is growing? If not, alarm bells ought to be ringing.
  3. Do you know and understand what your funds are invested in? When asked I find most people are not well informed when it comes to their investments whether the money is invested inside or outside of super. You can access information on the share market to build your knowledge (starting with our free eBook). 
  4. How has your superfund performed in the last financial year? It is important to keep track of how your fund is performing so that you know whether you are on track to achieve your investment goals.
  5. Have you considered whether the type of fund you have is right for you? I recently explored options including how a Self Managed Super Fund could assist with getting more control over super. For more on this, check out this interview I conducted called SMSF Investment Series: Part 2.

When we hear about changes being made to super it could be a wake-up call. One hour a week building your knowledge about investing now could mean $1000s more in savings for your account.

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