Many people don’t see retirement as something to prepare for when they’re still young, and that there is still a lot of time to think about it. But in reality, if you want to have a comfortable retirement, it is advisable to spend some time in learning about superannuation funds as early as possible.
What is superannuation fund? Also called super fund, it is essentially money set aside for your retirement. If you’re an employee, your employer contributes to your super fund, plus your own contributions. According to the law, your employer should pay 9.5% of your salary into your superannuation fund. These contributions accumulate and grow over time, ensuring that you can live comfortably once you retire.
Insurance through your Super Fund
Most super funds include life insurance to members. It usually differs in coverage: death cover, total and permanent disability cover, and income protection. Why is it important to find out more about insurance included in your superannuation fund? Here are some points to take into account:
- The default super fund of your employer should have minimum life insurance or default cover that you can increase, decrease or even cancel. The insurance premiums will be deducted from your super account.
- Getting a life insurance through your super fund is usually cheaper. It also offers flexibility since you can choose the amount that you plan to be covered for, and you can get the cover needed by yourself or your family.
- With the default cover, there is no need to undergo a medical check-up to get it, and you don’t need to pay higher premiums when you have a pre-existing condition.
Another thing worth-considering as far as superannuation in Australia is concerned is knowing how much your super fund is when you retire. You can do this with a superannuation calculator in Australia. It can give you an idea if you’re on track in saving for retirement and how much money you need for the lifestyle that you want to have once you retire.
There are different types of superannuation calculators in Australia but in general, keep in mind that it can only give you an estimate or an idea of how much your super fund is worth upon retirement and how fees will affect the final amount. It cannot indicate the actual final superannuation benefit since there are other things to be considered. These include investment earnings, your age, inflation, financial needs, and other external factors.
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