Add an extra $176K to your super (in three steps)
Superannuation | 5/04/2017 |
3 min read
If you’re approaching retirement seeing a financial planner is one of the single best decisions you can make. A properly qualified planner can help you avoid unnecessary taxes, access a range of government age benefits and plenty more.
But what if you’re in your 20s and 30s?
While there’s a variety of thing you can do to boost your financial situation, most of them can be organised in an afternoon and don’t require any outside help. Here’s three to get you started.
1. Try the Equip MyFuture Calculator
Our calculator has been designed to help you project your future superannuation balance. It allows you to adjust a range of variables to see what impact they can have on the final balance. It’s available to try by clicking here.
2. Check your investment strategy
The calculator assumes a number of default options, including your investment strategy. If you haven’t paid much attention to your super in the past you’re probably in a middle of the road MySuper option, which contains a mix of investment products. But that may not be the best option for someone in their 20s or 30s.
As a simple example, let’s say we have a member named Michelle; she’s 28, with a balance of $20,000, and an annual income of $60,000. Based on a default superannuation strategy she can expect a retirement balance of approximately $310,000.
Here’s where it gets interesting. If she were to adjust her investment strategy from the default option to a more aggressive strategy that same balance would be approximately $430,000 at retirement, an additional $120,000.
3. Think about salary sacrifice
While you’re checking out the MyFuture calculator it’s worth thinking about salary sacrificing. Adding a little extra to your super from your pre-tax income is a great way to grow your balance and benefit from compound interest.
Using Michelle as an example, let’s say she adds an extra $20 a week to her super. This money comes out of her monthly pay cheque, and is organised by her employer, so she never actually sees it.
Based on her default options that adds up to a retirement balance of $350,000. If she also selects a more aggressive investment strategy her final balance jumps to $486,000.
That’s an additional $176,000* in retirement, organised in two steps.
What can I do next?
If you want to take steps to improve your long term superannuation balance it’s easy. You can change your investment strategy by logging into your account and clicking on the investments tab. If you’re not sure which option is right for you, the Equip MyMoney tool can help you understand your investment personality, and how comfortable you with risk. It's available to all members once you login.
Salary Sacrificing can be organised by your employer. Just let the payroll person who how much you’d like to sacrifice and how often. They can take care of the rest on your behalf.
As for the extra $176,000? We’ll leave that up to you.
*This example assumes CPI of 2.5%, wage inflation of 3.5% pa. Please see the Disclaimers and Assumptions on our calculator page for a complete list of assumptions.
This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.