February 17, 2018

Different Types of Super Funds

How much do you need to live comfortably upon retirement? When it comes to planning for retirement, you can ask an expert for superannuation advice so you can better understand the process. You can also use a superannuation calculator to give you an idea of the amount you need to contribute regularly for your super fund.

Retirement planning can be done as early as possible. There is a wide selection of super funds to choose from, so don’t be tempted to get the first one that you’ll see. Each type has its own features, and knowing your options can make the selection process easier. Here are the different categories of super funds:

MySuper

If you’re employed and you haven’t chosen your own super fund, your employer will pay contributions to your MySuper. It offers lower fees options when it comes to single or life stage investments, and life insurance on an opt-out basis. MySuper also has simple features wherein you don’t have to pay for services that you don’t need.

Retail funds

Banks and investment companies operate retail funds which offer a lot of investment options.  These are normally accumulation funds which can range from low-cost or MySuper up to high cost.

Industry funds

These are usually low to mid-cost funds, though some offer MySuper accounts. Unlike retail funds, industry funds have a smaller number of investment options. Most of these are accumulation funds. However, there are several older funds that have defined benefit members.

Self-managed super funds

For those wanting to manage their own superannuation, they usually do this via a self-managed super fund (SMSF). It is regulated by the Australian Taxation Office. This private super fund can have up to four members who are all trustees and are in-charge of making sure that the SMSF complies with laws associated with it.

Public sector funds

These are designed for employees of the departments of the Federal and State government.  This super fund offers low fees and a modest range of investment options. Some also offer MySuper accounts. New members of public sector funds are in an accumulation fund, while long-term members have defined benefits.

Corporate funds

Employers run corporate funds which offer a range of investment choices. These are usually low to mid-cost funds. Most members are into accumulation funds, while the older corporate funds come with defined benefit members.

Got other ideas on superannuation in Australia? Share your tips on retirement planning in the comments section. 

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Reasons Why Having a Hobby Saves You Money during Retirement

Many retirees in Australia fear of running out of money, and for good reason. By the time you retire, you no longer have paychecks but the bills will continue to come in. And if you didn’t prepare for retirement, you may not be able to live the life that you want after you stop working.

Having a hobby during retirement is one good way to save money – retirement money, that is! Whatever it is that you’re good at, be it arts and crafts, gardening, playing a musical instrument or pottery, you can use your hobby to generate income during retirement. With this extra money coming in, you will access your retirement funds less frequently which helps in saving money.

Another reason why having a hobby saves you money during retirement is that it keeps you busy and mentally active. It’s about doing something that you love rather than for practical reasons so you can change your lifestyle that suits you and even get a new outlook in life. With a hobby, you’ll have a relaxed, comfortable life, and this hopefully translates to a healthier you, with less hospital visits that can take a chunk off of your retirement fund.

Here are other things worth-knowing about retirement planning, superannuation, and saving money:

How much do you really need upon retirement?

There’s no definite amount, but several factors come into play, such as your lifestyle and anticipating some of your needs that can change over time. That is why it is important to start planning for retirement while you’re still working. You can also use a superannuation calculator to give you an idea of how much you need to live a comfortable life when you retire.

Start planning for retirement early.

A retirement plan is not something that most people think about when they’re young but in reality, it’s best to start a retirement plan as early as possible so you can have a lot of time to grow your superannuation in Australia and not worry about running out of money. Review your finances and assess your current situation – how much super you have, your assets, and possible income sources that can contribute to your retirement fund.

Get professional advice.

A financial adviser will be able to help you with retirement planning. He/She will also be able to give you sound advice on where to invest so your money will grow in value and keep up with inflation and other factors that can affect your savings.   

Do you have additional tips on retirement planning and superannuation? Share your ideas in the comments section.

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