Money

Super's still super

Paul Clitheroe
Paul Clitheroe

In the last few decades the nature of retirement has changed radically. It's no longer seen as the beginning of our twilight years, but rather a fresh start. 

Financial security plays a key role in a quality retirement, and when it comes to laying foundations for our senior years, I reckon superannuation is still a super investment.

The beauty of super is that we generally can't access it until we retire. That makes it an ultra long term investment that benefits from compounding returns accumulating over several decades.

Around 80 per cent of Australian workers invest in a 'balanced' super fund, which invests across a range of asset markets including shares. In recent years balanced funds have taken a hit from by volatile sharemarkets, however research group SuperRatings found that in seven out of the last ten years, the average balanced fund has recorded positive returns. Over an entire working career, any negative returns on your super during bad years should be more than outweighed by the gains during the good years.

One of the chief drawcards of super is that it is extremely tax friendly. Contributions are lightly taxed, or not taxed at all if they are made from your after tax wages. The returns earned on the fund's investments are concessionally taxed, and from age 60 we can expect to access our super tax free.

It all points to super being a very useful investment.  The big question is whether you will have enough to fund a decent retirement.

Exactly how much you need depends on what you want to do when you retire. The latest (December 2011) figures from the Association of Superannuation Funds of Australia (ASFA) estimate that a couple looking to have what it considers a 'comfortable' retirement would need to spend about $55,000 a year. Those seeking a 'modest' retirement lifestyle need to spend close to $32,000 a year.

This may sound like a lot but with plans in place, and a healthy dose of dedication, you can accumulate enough super to live your retirement dreams.

The key is to take action early. Remember, super is a very long term investment and any extra contributions you make today will benefit from compounding returns over time.

There is a variety of ways to add to your super. You can salary sacrifice contributions by asking your employer to pay part of your wage or salary into your super fund instead of receiving the money as take-home wages. Or you can make a contribution from your own wallet, and if you earn less than $62,000 a year, the government will tip a bit extra into your fund tax free through the co-contribution scheme.

If you are approaching retirement it's essential to make the most of your super - and other assets, to maximise your retirement income.  This is an area where I recommend getting some professional financial planning advice. As a handy starting point, take a look at my eBook - "Top ten tips to making the most of your retirement". It offers sensible ideas for anyone in or near retirement, and you can download it for free from www.paulsmoney.com.au.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.

Topics:  paul clitheroe retirement superannuation



Community spirit on show at Maclean Christmas carols

Ted De Roos was performing at the annual Maclean Rotary Club Christmas carols at Maclean High School on Saturday night, 10th December, 2016

Young talent showcased at annual Christmas event

LATEST: Police appeal for witnesses to serious crash

EMERGENCY: A man, believed to be in his fifties, has been airlifted to Coffs Harbour Hospital with life-threatening injuries following a fail to stop incident at Dalmorton.

Three people still in hospital with serious injuries

Dakota's world beating spectacular performance

Dakota Mundine of South Grafton High School dances at the Schools Spectacular in Sydney.

South High student hits the stage at School Spec

Local Partners

Dakota's world beating spectacular performance

Dancer helps break world record at School Spectacular performance


Kernaghan's a 'boy from the bush' with a timeless quality

Country music singer Lee Kernaghan.

Lee Kernaghan is celebrating the 25th year of his breakthrough song.

Ready to rumble: Boxing makes long-awaited return to Grafton

DETERMINED: Grafton Amateur Boxing Club members Zac Cotten (Cruiserweight), James Morrison (Jnr Featherweight), Eddie Debono (Super Heavyweight), Rhys Walters (Light Heavyweight), Joseph Pigg (Jnr Welterweight), Jamie Mansfield (Cruiserweight) are prearing for upcoming fight night in Grafton.

Five North Coast title belts up for grabs

Cyclist's 24 hours of pain for mental health

International endurance mountain-bike rider Morgan Pilley is used to pushing through the elements, but this weekend he'll push on to raise money for local mental health services in a charity ride at Junction Hill.

Ride For Youth to raise money for local youth mental health services

Spiderman star used fake name to research role

Spiderman star Tom Holland.

Spiderman star went undercover at Brooklyn highschool

What's on the small screen this week

A scene from the TV documentary Running Wild: Australia's Camels.

TWO new Aussie docos will pique your interest.

EXCLUSIVE: Meet Robert Irwin, wildlife photographer

SNAPPER: Apart from wildlife, photography is Robert Irwin's great passion.

Steve's boy has a passion for photography

Louis Tomlinson's tribute to late mother

Louis Tomlinson's new single is a tribute to his late mother.

Justin Timberlake stuns students with secret class

Justin Timberlake stunned high school students in Sydney

Carrie Fisher says Ford will be bugged by affair confession

Carrie Fisher is sure Harrison Ford is annoyed at her

Five South Grafton houses that won't break the bank

Check out these South Grafton houses for sale

'Crucial' farm land eyed by defence department

Lawson Geddes moving the Brangus cattle to higher ground - which is the land the Defence Department is interested taking for the Shoalwater Bay expansion.

"You can't have one without the other.”

Former Shark Show for sale for $1.3 million

Vic Hislop at the old Shark Show.

TALK about a jaws-dropping real estate opportunity.

There's a whole lot of luxury in this home

The Endeavour Foundation's latest prize home in Mountain Creek.

WHEN it comes to desirable homes, it's hard to go past a prize home.

Give a little more this Christmas

TIME TO GIVE: Lee Johns, Courtney Smith and Daniel Kelly of Ray White Yamba promote their Little Ray Of Giving Christmas gift appeal.

Call out for presents, big or small

Ready to SELL your property?

Post Your Ad Here!