The Many Myths Surrounding Superannuation
Many common misconceptions exist for superannuation – from believing it’s just for older people, to having no control over it.
To help you cut through the clutter we’ve busted some common myths surrounding superannuation.
Myth: I don’t need to build my super, my inheritance will cover me.
Some people do inherit or stumble upon enough to fund their retirement, but the odds are slim if you’re banking on it. While this may be a nice daydream, it’s hardly a strategy for your retirement. Focusing on the financial elements that you can control makes the most sense if you want to set yourself up for a secure retirement. It’s never too late to get advice and start putting a plan in place for your financial future.
Myth: spreading my super across a couple of different funds is a good thing – like not having all my eggs in the one basket.
So many people are guilty of this, and it has the potential to significantly affect their final payout. It’s quite common for us to have a number of different super funds set up, but consolidating super is a crucial step if you want to maximise your investment and enjoy the benefits of fewer fees, more control over your insurance cover, and less paperwork.
While for many people this is a great cost-saving exercise, you may lose insurance cover through the process of consolidation. So, if you’re unsure, it’s vital to seek advice from a qualified Financial Adviser before you take this step.
Don’t feel guilty that you’ve never gotten around to consolidating your various super accounts – you’re not alone.
Myth: I don’t need to worry about it until I am older, much older!
Retirement may seem far away when you’re starting out in the workforce, but maintain a hands-off approach to your super for too long, and you could miss out financially in the longer term.
It is important to know that the longer you plan for your retirement, the better chance you will have in achieving your financial goals. You may also want to consider acting now by consolidating your funds, minimising fees, and making additional super contributions which can help boost your balance. Again you’ll need advice from a Financial Planner to ensure the strategy is right for you.
The long term impact of compounding returns also means that the earlier you take action and invest in your superannuation, the easier it is to accumulate over time and take fewer risks.
Myth: The money is locked up, I have no control over my super.
Super is your money and, while it’s invested over a long term, there’s a lot you can do to take control over your retirement savings. You don’t need to accept the default investment option.
You can change the way your super is invested, as well as adjust your contribution levels. Some people may choose to have a Self-Managed Super Fund (SMSF) to give them more control. SMSFs come with more responsibility though, given your obligation to also be a trustee, and this needs to be taken into account before taking this step.
For any queries you may have regarding your superannuation or your retirement plan, please feel contact us so we can put you in touch with one of our experienced financial planners.