How to take care of your superannuation at any age
Anyone can achieve financial freedom.
While everyone has different ideas about what that means to them, and the pathway to achieving that freedom will differ, there’s one crucial part of wealth accumulation that we believe people need to pay more attention to.
We’re talking about superannuation, of course.
Your super is one of the best ways to build your personal wealth and secure your financial future, even if you’re far from retirement age and barely give a spare thought to your super.
The good news? You can start prioritising your superannuation at any age.
The early years of your career
When you’re in the early years of your career, you’re probably not using your superannuation to build personal wealth – in fact, you might not even know which super fund you’re with! But it’s never too early to start prioritising superannuation. Here are our two favourite tips for those at this stage of wealth building.
Set yourself financial goals
Retirement strategies look different for everyone, but a great place to begin is to think about what you want your lifestyle to look like when the time comes to retire. Some common goals include travelling, spending time on hobbies or just having enough in savings to live comfortably without needing to adjust your lifestyle. Knowing your own goals and having actionable pathways to achieving them is an essential step.
Start contributing early
You don’t just need to rely on employer contributions, and if you’re a sole trader or business owner, you can’t. So it’s worthwhile setting up a recurring contribution to your super account.
You’ll be capped at a certain level of personal contributions each financial year, though it may enable you to access valuable tax benefits. So if you’re already setting aside money in a savings account, consider rerouting that to hit your super instead.
If you’re on a salary, salary sacrificing can also be a fantastic choice. This entails diverting a portion of your pre-tax income into your super, simultaneously reducing your taxable income and your tax rate.
When you’re just starting your career, you’ll have other things on your mind. But prioritising your superannuation and implementing a growth-focused investment strategy is the cornerstone of a healthy retirement.
Mid-career strategic reassessment
Your mid-career years are typically when you have other financial priorities, such as paying off a mortgage.
At this stage, you can review your superannuation strategy to match any financial obligations, including debt reduction.
The right strategy will vary depending on your circumstances.
Some might require a more balanced approach that doesn’t include as much risk, while others might want to increase their risk while they’re still earning and adding to their super.
Approaching retirement
Once you’re in the later years of your career, you’ll need to consider transitioning to retirement. And this is where those who have neglected their super might start feeling nervous.
When you’re at this stage, take an in-depth look at your overall superannuation balance and compare it against any financial goals you’ve set. Your aim is to gauge whether you’re on track with those goals or whether you’re still far off.
Consider questions like “If you retired soon, would you be able to live comfortably off your superannuation?” and “If you had to stop working tomorrow, would it cause potential financial hardship?”.
The answers to these questions can indicate where you’re at, as well as provide a clear view of where you need to get to. As for any investments, now is the time to take a more conservative approach.
The goal in this stage is to protect your accumulated wealth rather than take unnecessary risks, primarily because your timeframe to regain any loss is much shorter than in previous years.
Finding expert support after retirement
Once you’re retired, ideally, you’ll want ample funds available through a consistent income stream to support you day to day. And when you’re at this stage, make sure you continually monitor your superannuation balance against your lifestyle to ensure you’re not spending more than is wise and adjust when you need to. Knowing how to manage your wealth properly both before and after retirement can be difficult, especially if you don’t have the time or knowledge to dedicate to it. Receiving guidance and advice from wealth management experts can guide you onto the right path – and keep you there.
North Advisory provides personal wealth services that support business owners, sole traders and everyone in between in learning wealth accumulation, wealth management and more.
Contact us today to learn more.
Driven by our values
Effortless and Seamless
On-Boarding Process
Intuitive and Knowledgeable
Direct Expert
Access
Useful and Articulate
Financial
Reporting
Forward
Thinking
Compliance Solutions
Streamlined
Tech
Integrated and Automated