Retiring might be many years away for you, but taking the time to prepare now will help you move into a stress-free retirement when you are ready.
Step 1: Look into your current arrangement
When you’ve worked multiple jobs it can be easy to end up with multiple super accounts. If this is the case, the first thing you should consider is consolidating your accounts into one. If you have multiple accounts you’re probably paying multiple fees and may not be getting the full benefit from your money. Before you make a decision on consolidating your super, you should compare the costs, fees, risks and benefits such as insurance cover of each super fund.
Step 2: Estimate how much you need in a single year in retirement
The Association of Superannuation Funds of Australia (ASFA) provides a guide for how much the average person and the average couple may need per year of retirement. It is updated four times a year to ensure it stays in line with current costs.
To personalise it to your own circumstances you can estimate your costs per month for the following categories ASFA outlines:
- Household goods and services
Multiply the total monthly amount by 12 and use this annual total in Step 3 below.
Step 3: Check if there is a shortfall
Now you have a rough idea of how much you want to spend each year when you retire, see whether you’re likely to reach goal by contributing to your super at your current rate by using our Retirement Calculator. It’s important to keep in mind that your income and guaranteed super contributions may increase over this time period.
Step 4: Speed up the process
Whether there’s a shortfall or you want to make sure you have more super when you retire, there are ways you can boost your super.
These include consolidating all your super into one account and using salary sacrifice to ensure that you’re making the most of the tax concessions available – typically extra contributions from your pre-tax income are taxed at a rate of 15% instead of your marginal tax rate (plus Medicare levy and other applicable levies).