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Making your super last

When Australians reach retirement age, they have the option of withdrawing their superannuation as a lump sum or taking a pension that will be a reliable source of income for a number of years.

Taking out your superannuation as a lump sum can be incredibly tempting, especially if you reach retirement age with some debts that still need to be paid off. However, blowing through your superannuation is easier than you think. If you choose to withdraw a lump sum, then you find your superannuation is insufficient to fund a comfortable retirement.

Industry experts estimate that a single person needs an income of approximately $43 000 per annum to fund a comfortable retirement while a couple needs approximately $58 000. The age pension, at its current rate, only just exceeds half of these amounts.

If you are nearing retirement age, you should carefully consider your options when it comes to withdrawing your superannuation. If there is some reason that you need to make a lump sum withdrawal, for example, a daunting mortgage, then you may care to investigate a variety of strategies. Remaining in the workforce for an additional few years will boost your superannuation savings and the transition to retirement program offers over 55s some significant tax breaks.

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Understanding various kinds of super fees

February 16, 2018

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.