A recent report on the way Australians regard their superannuation reveals some good news, but also dished up a few worrying results.
The FSC ING Direct Superannuation Consumer Report reveals strong support for our super system with 89% of respondents giving super the thumbs up as a means of building retirement savings. Although 74% of workers let their employer choose the fund their super contributions are paid into (known as a ‘default fund’), around 72% of respondents were able to say roughly how much they have in their fund at present.
That’s the good news. Beyond these core issues, for many Australians the details of their super can start to get a bit hazy.
There is uncertainty over life insurance for instance, with one in four respondents unsure about whether or not they have life cover through their fund.
Only around half (48%) the survey’s respondents were aware that they could choose between different investment options for their nest egg, and about the same proportion didn’t know what fees they were being charged by their super fund.
On one hand, these findings highlight what a no-fuss investment superannuation can be. It just keeps chugging away while you’re in the workforce, so the overriding issue is to stay in touch with your fund throughout your working life. That way your super can easily be located and accessed when you retire.
However many workers take little more than a passing interest in their super – often because the money is locked away until retirement. Yet over the course of a working life, it’s likely you will build a considerable sum of money in super savings.
As a guide, a worker aged 30 earning a salary of $50,000 annually can amass around $324,000 in super savings by age 65 – and that’s just relying solely on employer contributions and assuming average investment returns.
It’s a decent honey pot, and with this sort of money at stake it’s definitely worth getting to know your super better.
Chances are you have received your annual super fund statement in the mail recently. It’s worth a look, and some of the key things to make note of are the fees you’re paying; whether or not you have life cover through your fund (it’s a plus if you do); and the fund’s underlying investment strategy.
Most Australian workers have their super in a ‘balanced’ style of fund with strong exposure to shares. A more conservative, cash-based investment strategy could mean more stable – though lower, returns on your super over time.
To discover more about why super is such an important investment for your future –and how you can add to it, take a look at my book Making Money or visit the government’s Money Smart website.