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Mastering Superannuation: Your Guide to Financial Empowerment

Article By Jamie Eames | | Financial Planning

Superannuation, often perceived as a distant and complex subject during youth, holds profound implications for your financial future. Proactively managing your superannuation from an early age can substantially bolster your retirement portfolio. Let’s delve into Superannuation 101 to understand its fundamentals and the significant benefits of early strategic planning.

Superannuation is essentially a compulsory savings scheme that helps Australians accumulate funds to live on once they are over age 60 and retired. Currently, employers are required to pay 11% p.a. (increasing to 12% by 1 July 2025) of your salary into your super. This money is then invested over your working life, ideally generating compound returns that amplify your savings substantially over time.

The earlier you optimise your superannuation strategy, the greater the rewards. Leveraging the power of compound interest, contributions made in your 20s can exponentially surpass those made in your 40s or 50s by the time you retire. Each year or decade of proactive planning can translate into substantial growth in your retirement fund.

This is why it is crucial to ensure you choose a superannuation fund and investment options aligned with your age and risk profile now. Many individuals default to standard investment options, which may not be appropriate for your current stage in life. By selecting an appropriate super fund and opting for more growth-oriented investments early on, you can potentially accelerate your earnings.

As an example, a 25-year-old earning $80,000 p.a. with a current super balance of $20,000, will grow his balance to approximately $810,000 by age 65 (based on investment performance of 8.5% p.a.). Whereas the same person in a lower risk profile earning 7.5% p.a. will only grow his balance to a little over $645,000.

Superannuation calculator –

While retirement may seem distant, organising your super properly now offers major advantages. Simple steps such as consolidating extra accounts, checking fees, and adjusting your risk level sets you up for maximum hands-off growth over your entire working life. It’s an easy win that your future self will thank you for.

Superannuation serves as a tax-efficient vehicle for building retirement savings, and informed decision-making from a young age maximises its potential through compound growth. Don’t underestimate this crucial investment! Contact your trusted Altitude Adviser for a comprehensive Superannuation Strategy Review now, because investing effort in your super today guarantees a more comfortable retirement tomorrow.

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