Smart ways to grow your super


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Here's an amazing fact: 800 Australians will retire every day over the next decade. Many of them can expect to enjoy long and fulfilling lives, potentially well into their 90s - a welcome reward for the decades they spent in the workforce.

The catch is that while retirement is meant to be a time of relaxation, two out of three Australians worry that they won't have enough money to enjoy a decent lifestyle.

But Jacki Ellis, head of retirement at Aware Super, says five simple steps can supercharge our super balances and allow more people to head into retirement with optimism and confidence.

smart ways to grow your superannuation

1. Understand how much superannuation you need 

It's easy to be unsure or confused about how much super you need to enjoy a quality retirement. Many figures are bandied about and in some cases the numbers can be overwhelming.

Ellis says a simple rule of thumb can help.

"Most people need about 70% of their pre-retirement working income," she says. "That's because you'll likely be paying less income tax, you're no longer having to save for retirement, and hopefully the majority of personal debt will be paid off."

Explaining how this baseline translates into super balances, she says a typical Aware Super member who gives up work at 67 and has before-tax retirement income of $80,000 annually has about $460,000 in accumulated super as a single or $570,000 as a couple combined.

These balances can sound daunting. But the thing to remember is that there is no one-size-fits-all level of super savings that is right for everyone.

"Retirement is very personal," says Ellis. "What matters is that you think about retirement goals, and how much you're likely to spend on your lifestyle as a starting point to understanding how much super you will need."

It's worth pointing out, too, that income derived from a super pension is tax-free. So, the money goes a lot further than in our working days. "That drives better retirement incomes," says Ellis.

In addition, many Australians can expect a helping hand from the government age pension. Three out of five over-65s currently receive a full or partial age pension and Ellis expects this to continue.

"Knowing how the government age pension and super interact provides peace of mind," she says.

2. Know if you are on track to reach your ideal target

Once you have an idea of your preferred retirement income, it's a lot easier to work out how much you'll need in super. This provides a clear target to work towards, and lets you know if you are on track to achieve your ideal balance.

Fortunately, plenty of online calculators can help. Aware Super has gone a step further, launching a new online tool - My Retirement Planner - that personalises results for members.

It estimates how much money they'll need in retirement, their likely super balance on retirement, and how much income they will receive based on their super plus age pension.

My Retirement Planner also provides a retirement confidence score. This shows how close you are to achieving your goals - the higher the score, the more likely you are to have a retirement income approaching what you want.

"What's really exciting about My Retirement Planner is that it provides a step-by-step action plan to help members get started growing their super," says Ellis.

3. Consider changes to boost your balance

One of the great aspects of superannuation is that there are many ways to grow your balance - and it really is never too late to start.
From age 55, for instance, Australians can make a downsizer super contribution of up to $300,000 ($600,000 for a couple combined) from the proceeds of a home sale.

There is no maximum age limit, and downsizer contributions aren't limited by normal contribution caps.

Simple steps such as consolidating multiple accounts into a single fund can boost your super by saving on doubled-up fees or insurance premiums.

Making personal contributions can also have a profound impact on your final balance, thanks to the phenomenal power of compounding. "Every $1 extra contributed to super in your 20s increases your final retirement savings by $3," says Ellis.

However, you don't need to be a 20-something to benefit from compounding. "Contributing an extra $1000 each year to super from age 45 can bring forward retirement by one year," says Ellis.

4. Talk to your super fund

Super funds aren't just a place to grow retirement savings. They can also be a valuable source of free advice.

That matters because a survey by Adviser Ratings, a service that helps people find an adviser, confirms Australians are keen to get advice about preparing for retirement.

The problem is that the average cost of financial advice is about $4215, making it an option beyond the reach of many.

The solution is to speak to your super fund.

Most funds offer personalised advice about super at no extra cost. It's a great way for members to make informed plans for retirement. That said, the quality of the advice service can differ significantly between funds.

Aware Super has recognised that when it comes to financial advice, it generally prefers to connect with real people. This has underpinned the launch of its new Super Helpful Check-in.

It's a personalised service that allows fund members to have an online video meeting with an adviser to discuss everything from ways to boost their savings through to developing retirement strategies.

"Helping our members develop a plan for retirement so that they know what the future holds is a huge focus for us," says Ellis. "It allows Aware Super members to put themselves in the best possible position for retirement.

"We understand there can be a sense of fear around seeking advice, or a perception that good advice is only for the wealthy. But it's been very rewarding to see how providing access to support, guidance and help is setting our members up for retirement."

According to Ellis, Aware Super members who take up available advice and guidance offerings will be 2.5 times more likely to make voluntary contributions because "they understand the importance of driving long-term positive impact to balances".

5. Choose the right fund

By the time most of us retire, our super could be our second most valuable asset behind our homes. That makes it worth taking a good look at your fund to be sure it is delivering the right combination of healthy investment returns and competitive fees to grow your balance over time.

The super regulator, APRA, undertakes regular reviews that show how each fund performs in terms of returns and fees. However, Ellis believes there is an additional factor to look for.

"It's important to make sure your fund can give you the help and service you need to develop a plan for retirement."

On this score, the larger funds typically have the scale needed to deliver a range of services, such as apps, online calculators and tailored advice.

"The easier it is for members to access help and support, the more empowered and confident they feel about retirement," says Ellis.

The good news is that the super industry as a whole has worked hard in recent years to make it easier to switch funds. So, you don't have to stick with a fund that's underperforming or not looking after its members properly.

Some planning, your fund's retirement tools and a regular check-in with its advice service can be the key to looking forward to retirement, confident that it will be everything you hope for.

This report was sponsored by Aware Super. It was independently researched and written.

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