(03) 9020 2905The best things in life – like a hug from your kids – are free. But, sadly, you can’t survive on free stuff, without turning to crime and pinching everything else.
Want a life with a nicer sweet treats? Have more money. The more of it, the better.
Want a nicer long life? Well, knuckle down and build your super. Or it’s the government age pension for you.
So, given that super is your money and has the ability to turn cordial into champagne in retirement, why isn’t it as popular as buying property with Australians?
Because, while the government has been selling us that box of chocolates for more than 20 years, we’ve all read the small print on the government’s wrapping: “Every box will taste different. Recipe changes without notice.”
In recent weeks, the Government took away a few cases of Dom Perignon from your retirement. Sadly, most Australians probably didn’t even notice.
But in a deal every bit as seedy as a back alley drug sale, Future You just got robbed of $3500. That’s in actual dollars. Compound it over a few decades to retirement and you could triple it.
That Government and Clive Palmer deal, that signalled an end to the mining tax, bought with it some changes to superannuation.
The first is that we aren’t getting the increase in the superannuation guarantee from the current 9.5 per cent to 12 per cent over the next few years. The timeframe for that has been pushed out by two elections, so it’s now so far off that it might as well not be happening.
(The second is actually a legup for lower paid workers earning less than $37,000 a year, who will continue to get a super top up of up to $500 into their super, so it wasn’t all bad news.)
Hey, pay attention when politicians do this sort of stuff, guys and gals! It’s important.
You were supposed to have your super payments rise by 2.5 per cent over the next half a dozen years or so. Now it’s not going to happen for closer to a decade. Possibly never.
The number was moving to 12 per cent, because 9.5 per cent isn’t enough. That’s almost unanimously accepted. But what should you do now that it’s not happening?
You don’t have to just sit there and take this.
As with all things financial in your life, you have to take some control, some responsibility, yourself.
Superannuation is your money. Sure, it can be difficult to see it that way when you can’t touch it for such a long time, but it is yours.
Understand this: No-one is going to care much about it except for you, your wife, and, possibly, if you outlive your partner, a gold-digger.
You can easily make up for that $3000 that’s been stolen from you by contributing an extra $10 a week into super. That’s just $500 a year. You won’t miss it. And you’ll save a tiny little bit of tax too.
But if you’re in your 30s or 40s, you should be taking this more seriously. (Anyone in their 50s or 60s should be taking it very seriously and seeing a financial adviser about how to maximise their super contributions.)
The thing about super is that getting money into super is harder than it has been since super was broadened to include all by Paul Keating in the 1990s.
If you’re in your 20s, start tipping in an extra $20 a week or so. Maybe even $40 a week.
In your 30s, raise it to $50 a week ($2600 a year). In your 40s, you’ve got to start getting serious about your super and putting in something like $100 a week or so.
Getting money into super is the hardest bit.
After that, invest it as hard as you can stand. By that, I mean angle as much of it into shares and property as you can stand. Sure, that’s the risky end, but super is designed to last you for decades.
You’re supposed to accumulate money in super until, roughly, 65, then live off it for about 20-30 years after that.
Shares and property beat cash and fixed interest, over decades.
But, to beat this latest government backroom deal setback, just concentrate on getting a little more into super now.
Bruce Brammall is the principal adviser with Castellan Financial Consulting and a licensed mortgage broker (www.castellanfinancial.com.au). E: bruce@castellanfinancial.com.au.