A lot can happen in your life from when you start working until you retire. You may get married, start a family, or buy a property. Major life events have an impact on your finances and are also great times to review your super: its performance, fees you pay, and how your retirement money is tracking.
Your super is there for you in retirement. It’s part of a long-term financial plan. For example, you could be paying into your super for over 40 years and using it to support your retirement for more than 20 years.
The decisions you make through your working life could make a big difference to your final balance. Let’s take a look at 4 life events where it can be a good idea to review your super.
1. Starting a serious relationship
Most people don’t start their relationships talking about super. But, as a couple, you may want to consider your super as a joint asset. When de facto or married couples split or divorce, this is how it’s legally positioned.
While you can’t combine 2 super accounts together, or have a joint account, you can contribute to each other’s super. This is called a spousal contribution. Many people consider adding to their partner’s super if they’re taking a break from work. This can include parental leave, study leave, or to care for a family member. These extra contributions can help you support the growth of each other’s balance.
You may also want to check you’ve nominated a beneficiary for your super. This is the person your super and any insurance entitlements will go to when you pass away.
2. Changes to your spending – buying a new house or starting a family
Big changes in your spending, such as buying a house or having a baby, can be a good time to review the insurances in your super. While this is an exciting time, it also means new financial responsibilities.
Your personal insurance is there to help you manage your financial commitments if you need to take time out of the workforce due to temporary or permanent disablement. For many people the biggest cost is a mortgage or family. Your insurances can also help support your family financially if you pass away unexpectedly. While it’s difficult to think about, it’s important to be prepared.
For AustralianSuper members insurances in your super may include: Income protection, Total and Permanent Disablement, and Death Cover. The right level of cover for your lifestyle is important, and as your life changes, the level of cover you need will change too.
Review your insurance to make sure your financial needs, including unforeseen events, are included. For example, if you were never able to work again, would your total and permanent disability insurance be enough to cover your lifestyle, expenses, and any new health care needs such as home modifications.
More than 70% of Australians with life insurance have it through their super fund1.
3. Changing jobs
A salary boost from a new job can be a good time to consider topping up your super.
Making voluntary payments is known as salary sacrificing. And adding a little extra each month can help you save more for retirement and could have tax benefits.
Considering your debt levels before adding to your super.
Being stood down or made redundant
Importantly, losing a job is also a key time to check in with your super. Check what fees you’re paying and make sure you don’t have multiple funds. By consolidating your super into one account, you’ll pay a single set of fees and know where your super is. If you’re considering combining accounts, ask your existing super providers for information about any fees or charges that may apply, such as exit fees, or waiting periods on new insurance. You can compare superfunds for free using the ChantWest Apple tool, via the AustralianSuper Website.
4. Financial windfall
Sudden wealth from inheritance, work bonuses or even a lottery win can improve your financial situation. You may choose to top up your super. The earlier you add to your super, the greater benefit from any investment returns and compound interest leaving you better off at retirement. There are limits to how much you can add each year. Make sure you know the contribution cap limits and any tax implications. It may be useful to speak to your super fund for general guidance, or a financial adviser for personal advice.
A long-term investment
Super is a long-term investment and is something that needs reviewing throughout life.
Reviewing your insurance, nominating your beneficiaries and checking your super performance are simple things you can do to make sure your super is on track for your best retirement.