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Super changes and your retirement planning

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Australian super is changing, and the onus is likely to be on us as individuals to fully-fund our retirement. What does this mean for your retirement planning?

Since the introduction of the Superannuation Guarantee Scheme, Australians have been encouraged to save for their own retirement. This has progressed over the years, with increased tax concessions and policy changes to enable Australians to put more money away for when they stop working.

Recently, there has been speculation that the coalition plans to introduce cuts to the age pension in the upcoming Federal Budget on May 9. Although Prime Minister Malcolm Turnbull has rejected these claims, conjecture is rife that the Australian Government is moving towards a fully self-funded retirement system, with no government assistance.

Whether this is true or not, it's never been more important for Aussies to plan ahead for their own retirement. For many of us, this means bolstering our superannuation, and considering the age pension as a fall-back option at best.

Superannuation

Speculation surrounding the age pension has caused many Australians to wonder about the future of superannuation.

How to properly plan for your retirement

First of all, start early. A lot of young Australians may not prioritise super, because retirement is a long way off for them. But the earlier you start and the more you contribute to your super fund, the bigger your nest egg by the time you reach retirement age.

You can also dedicate time to understand what your super is going to - something a professional financial adviser can help with. Is your money going to a conservative, balanced or aggressive fund? Each of these have different levels of risk and return, and you should ensure your super is matched with your appetite for growth. Super funds invest in a wide variety of assets - if you don't know where your money is going, get in touch with a financial adviser to work it out.

Another way to grow your retirement funds is to take control of the investment strategy yourself, with a self-managed super fund (SMSF). While this gives you the capacity to pool funds with up to three other trustees, and complete control over where the money goes, it is a complex process. You will also be personally liable for any compliance failures, and not everyone is an investment expert - picking good investments can be difficult. Super Guide reports that there are nearly 600,000 SMSFs in Australia - if you're ready to join these ranks, make sure to talk to your financial planner.

retirement

It's important to have a handle on how much you will need to retire comfortably.

If you don't think you'll accumulate as much as you'll need to retire comfortably, there are still options to ensure that your life post-full-time work will be enjoyable. You can consider retiring later to keep your income stream up for a few more years. Alternatively, you can partially retire and access some of your superannuation, while continuing to work part time once you reach retirement age.

Ideally, however, we will all have a wealth management strategy in place that ensures no matter what changes to super the government implements, you will be able to live out your life in peace and comfort. The hard part is setting up a plan to make sure you get there. If you want to maximise your super or need help managing the changes, get financial advice from one of Yellow Brick Road's friendly local representatives.

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