“If you fail to plan, you are planning to fail …”

For working professionals in their thirties and forties, retirement might seem decades away.  But no matter how hard it may be to picture now, for most Australians the age pension alone is not enough to fund their retirement goals. That’s why it’s never too early to start laying the groundwork to build a nest egg for the future. While many financial strategies save money, superannuation remains the most tax effective way to build savings and Elston’s Head of Strategy, Darren Withers, recommends that by the age of forty, people should be considering a strategy for maximising their savings through superannuation.

Superannuation Considerations

As at 30th June 2015, over 14 million Australians had a superannuation fund account, with approximately 45% of these people having more than one account. Withers urges people to avoid the pitfalls of having multiple accounts. “Consolidating all your superannuation into one fund is very important; it not only maximises cost efficiency but ensures super is not lost,” he advises. “Approximately $16 billion of cash and other investments sits in unclaimed superannuation accounts across Australia.”

Withers also highlights the importance of comparing your existing superannuation fund with a new fund when starting a job saying, “Fees, returns, insurance and choice of investment options are all important factors to evaluate when considering whether to change.”  Further, he asserts the most significant aspect of superannuation is getting the asset allocation right.  “The asset classes your super is invested in is the most important determinant of return, and even a small difference in returns can lead to a large difference to your end balance over the long term.”

Managing Your Superannuation

By putting a superannuation management strategy in place now, you’ll reap the benefits in retirement years.  There are many options available to supplement your employer super guarantee contributions, and you can maximise your superannuation fund in a number of ways by making your own contributions, organising a salary sacrifice arrangement with your employer, or taking advantage of eligible government superannuation co-contributions.

When it comes to personal contributions, Withers offers some sobering advice based on the recent proposed Federal Budget changes affecting superannuation, “The lower contribution limits will make it harder to top up superannuation close to retirement, so people need to start saving earlier to be able to accumulate enough to comfortably realise their retirement goals.”  With the proposal to reduce the annual cap on concessional contributions to $25,000, Withers urges Generations Y and X to seriously focus on their superannuation strategy.

Planning for the Future Today

When asked what he considered to be the most important piece of advice for young Australians planning for retirement, Withers stressed preparation was the key, “At Elston we really push the idea that people need to start early in order to reach their goals. The earlier people start a savings plan, the easier it is, and the more it will pay dividends for them in the long term.”

“Superannuation is a great vehicle not only for elevating your savings for retirement, but for managing tax.  The government provides significant tax concessions for super, so people should take advantage of it.”

When you control your wealth you control your future, and while it may be difficult to picture today exactly what retirement will be like years from now, savvy Australians across the workforce are taking heed of Withers’ timely maxim:  If you fail to plan, you are planning to fail, and seeking the advice of a qualified financial planner to leverage their superannuation for retirement.

To discuss your superannuation options or enquire about strategies for retirement planning, call 1300 ELSTON or email info@elston.com.au and an adviser will be in touch.