Sunday, September 29, 2013

Make Me Rich Please: Part 4 The Superannuation


Superannuation was one of the big focus area's for me coming out of our session with a financial planner. Mine is OK, but Husbands is pretty weak, and if we want to be in good shape for retirement, it definitely needs work.

Our key actions coming from our Statement Of Advise are:

-Update our binding nominations. Superannuation actually sits outside of your will, the company will pay out your insurance and balances to whoever is your binding nominee (barring disputes). And they'll make that payment relatively quickly. But without a binding nomination, the funds go to the estate, which can be a longer process for the money to end up where it needs to be.
Since Husband I want the proceeds to go to one another to alleviate what would be a stressful time of life, this was pretty clear cut.

Tip: Binding Nominations expire every 3 years! It must be updated regularly for it to be valid.

-Change Husbands superannuation over to a new fund. Our planner was able to guide us to a new fund that had lower insurance costs + fee's & has had a more positive performance over the last 5 years. In addition, the insurance benefits cover for a longer period, so god forbid we ever need to make a claim for unemployment or disability reasons, the payments will be higher.

-Restructure my own superannuation allocation. The way my funds were allocated are not suitable to my age or risk profile (as dictated by me). The new allocation is more in line, and should produce a higher return over time (although any investment in shares is unpredictable, and I know that).

-Increase our insurance cover for Life & TPD (total and permanent disability). We ideally want life cover that would allow the remaining spouse to cease work to care for our young children and possibly pay for some home help. Similarly, we want to ensure that payments in times of stress (TPD) are more than enough to support us.

-Make additional contributions to each of our funds. Our planner has directed us to contribute $500 EACH per month into our funds. This is the one we are not sure of. Although I realise our funds are not on track to have the balance needed for a potentially 25-30 year retirement (retire age 60, 65ish, possibly live to 95), this just seems like SO MUCH MONEY to lock away where we can't get it ($12,000 per year!). And I had no idea that we supposedly had so much disposable cash each month.

We will probably meet this one part way, with additional contributions, but not as much as suggested.

Superannuation is not sexy. It's not about today, so it's not that interesting. That's why it's easy to ignore. When was the last time you looked at the nitty gritty of your Super? Most funds have online access these days, why not take 5 minutes to jump on and see for yourself what kind of old age comforts you can expect.

Following the "Make Me Rich" series? Click here for more.

2 comments:

  1. Great blog! Yes I agree super is so important and so many people ignore it. I really like the way you are accepting some of your planners advice in some areas but then modifying as you see fit in other areas, that is such a great way to do things.

    ReplyDelete
  2. awesome information on superannuation. i have been a member of HESTA for past few years and my super account is doing great.

    ReplyDelete

I LOVE comments. They make my day even if you only say Hi!