As the time comes for you to consider leaving the workforce, it is necessary to plan how to make the most of your superannuation in order to strengthen the chances of a financially secure retirement. The reality is that you could spend almost as long in retirement as you did in the workforce. Careful planning can significantly boost your super and make a big difference to your future lifestyle.
Identify your dependants and non-dependants:
When it comes to planning your retirement and how your super will be used, ensure that you have clear plans about what happens to your super benefits and other assets in the event of your death. Identifying who will receive your super benefits becomes more important if you plan to leave them to a non-dependant for tax purposes, such as financially independent adult children. You can do this by ensuring that you accurately nominate your beneficiaries. Planning this ahead of time can help to relieve your family and loved ones of stress, as well as potentially save on tax.
Combine your accounts:
Consolidating your super funds could possibly save you thousands of dollars in fees. Other benefits include reducing your paperwork and making it easier to keep track of your super. You could also end up with more superannuation than you realise, as research has found that if all super fund members were to consolidate their multiple accounts, the average Australian account balance would increase by 79%.
Do a financial stocktake:
Another important step when it comes to planning your retirement is to work out what kind of income you would like to have. By planning this ahead of time, you can then calculate how much money is needed to finance your preferred retirement income. This will help in working out how much super and other savings you currently have and estimate what you will have if you continue your current savings strategy. If there is a gap between your desired retirement income and your projected savings, this is further motivation to make the most of your current superannuation.
Working out how much you will need to finance the retirement lifestyle you desire, will come down to a variety of factors, including whether you own your own home, your spending patterns and the value of your superannuation and other investments. The sooner you start planning and make moves to close any savings gaps, the more likely you are to achieving a comfortable retirement.