Why do most Australian's have so little Superannuation?
These changes bring superannuation into focus, as many Australians may find themselves without a full or partial pension. As superannuation is designed to provide an income in retirement to substitute or supplement the Age Pension', many Australians are seeking advice on how to properly grow their super. However recent statistics released by ASFA (The Association of Superannuation Funds of Australia) show that Australians may not be well equipped to deal with the retirement phase, with the Average retirement values being $270,710 for males, and $157,050 for females'. Although these sums indeed represent a substantial amount of savings, there may be major difficulties ensuring that these savings are able to provide adequate standard of living for the entirety of one's retirement, especially in Australia where Life expectancy is the fourth longest of any country'.
Why do most Australian's have so little Superannuation? Although current superannuation guarantee rates are at its highest, at 9.5% of earnings per year, many recent retirees will need to substantially rely on the Age Pension in their retirement'. The problem lies with the Superannuation funds in Australia, and the absence of strong consumer-driven competition'. Superannuation funds tend to invest their member's earnings into internal investment funds, which members generally are not informed of and there is minimum interaction between superannuation funds and members, unless the member voluntarily decides to monitor their superannuation. As a result, members are not fully engaged with their superannuation and member remain unaware of the many strategies that can be employed by members to grow their super. Utiilising Salary Sacrifice contributions, Personal Contributions and Spousal Contributions now have major incentives, as the Federal Government pushes for a more private retirement income system.
In addition, members generally have no idea where their money is invested and there is no active management of member's portfolios, so when the financial markets underperform, the losses transfer to the member. This can be costly, as the compounding growth in superannuation can multiply both gains and losses. Members are unaware of market conditions and are unable to do anything to prevent their superannuation from being negatively affected.
Our Service
At Qwealth, our clients receive quarterly superannuation updates and enjoy a transparent window into their superannuation investment plan. In addition, we can show you how to avoid large losses every time the share market falls. Some clients may also request to invest in shares that they find particularly interesting. The key to creating wealth is to seek professional advice and to start now rather than later.