24 June 2009
Keeping the faith
Despite trying times and pressure on personal incomes, nothing gets between some Aussies and their retirement savings. While the level of voluntary contributions in some funds has fallen, thousands of Australians still keep faith with their super each month.
Statistics from the Australian Prudential Regulation Authority (APRA) say member contributions to industry and retail super funds fell in the 2008 September quarter by an average of 43.1 per cent. However ASFA chief executive Pauline Vamos reveals that actual declines differed greatly from fund to fund.
"For some isolated funds, their level of voluntary contributions has dropped from 10 per cent up to 50 per cent," Vamos said. "You`ve got other funds that have had no change whatsoever."
Nothing but the best for you.
In choppy waters like these, why are people still contributing to their super? We’ve got the simple answer — super can provide a great lifestyle in retirement. Long-term relationships need commitment to be rewarding, especially when the going gets tough. With generous tax savings exclusive to super and industry funds providing low fees with no commissions, super is the best investment vehicle there is going into retirement. So it’s no surprise that Australians are using super to fund their lifestyle in retirement.
It’s not you, it’s me
Then there’s the Aussie who wants a comfortable lifestyle in retirement, but simply can’t spare the cash right now. Debt, reduced income and increased living costs are three major reasons why some just can’t match deed to desire. But even if you’re in one of these situations, there are still things you can do:
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Make the lowest possible voluntary contributions on top of the 9% your employer contributes from your salary. You can easily arrange salary sacrifice with your employer, or make personal contributions from your own pocket. Visit our Co-contribution Calculator to see what just $10 a week could do to your super over your lifetime!
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If you’re eligible to receive the Government co-contribution, contribute just enough for your super to qualify. Make that your super savings benchmark for the financial year.
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Find any lost super accounts and roll them into your super account. You’ll benefit from an instant cash boost and pay less fees.
Super is long-term. So what’s the rush?
The Westpac/ASFA retirement standard for December 2008 estimates that a couple desiring a comfortable lifestyle in retirement will need a yearly income of $50,414. A super that can provide generously year in year out will need to be built up over decades.
Because of the principles of compounding interest, regular contributions into your super are what make the difference over the long term. Keeping faith with even the smallest amounts into your super is what will make an overall difference towards your retirement savings.
Lastly, seize the day. While share markets are down, putting extra money into super allows you to buy more investments (at relatively cheap prices). These can be expected to increase in value when the market turns, giving you a great return on your money.
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