Thursday, 4 April 2013

Superannuation – the basics

Superannuation is getting a lot of press in Australia at the moment, with speculation as to what changes the government will propose to the system, and to what extent they are designed to improve the design of the system for the long term versus providing short-term funds for government spending priorities.

One figure that has stood out for me in all the recent coverage is the average balance of superannuation women are now retiring with – according to the First State Superannuation website (http://www.womenandsuper.com.au/Essentials/SuperGenderGap/TheFacts), the average retirement payout in 2010 (determined by the average balance for those aged 60 to 64) was $112,600 for women and $198,000 for men.  And this is after 20 years of the superannuation guarantee being in place in Australia!

If you want to ensure you have enough money for a comfortable retirement and not rely on the pension (and who knows if that will even be around when the Millionaire on Heels retires), you need to make sure you are contributing to superannuation now.  Given the power of compounding, a small investment each year over a several decades can provide you with a substantial balance upon retirement.