How to turbocharge your superannuation early in your career

Retirement is a broad and complex life transition, and planning for it can feel daunting.

Many people do not know where to start or whom to turn to and many Australians find the retirement income system difficult to navigate.

Retirement is one of the biggest moments in life, says Katrina McPhee.

Katrina McPhee, Aware Super chief of staff and group executive communications and advocacy, says members who start planning for retirement earlier end up in a better financial position.

In this Q&A, she sets out a few key things to know about retirement – and how best to prepare for it financially.

When should I start planning for retirement?
There’s no better time to start planning for retirement than right now.

The reality is, we know it’s hard for people to see further than 15 years ahead and, as a result, most people aren’t engaged with their super until they hit what we call the ‘oh crap!’ moment.

This tends to happen between the ages of 45 and 55 when retirement is in the not-too-distant future.

For younger people, superannuation is likely to be the largest asset they own, so getting ahead and at least looking after their super now will pay off in the long run.

In fact, one of the greatest gifts you can give your kids is helping them to get their super sorted and start saving early.

People who start planning for retirement earlier end up in a better financial position.Credit: Andrew Quilty

How much do you need in retirement?
First, it’s important to understand what you’re spending now and the lifestyle you want in retirement to help inform how you plan.

Most people need about 70 per cent of their current take-home pay to maintain their lifestyle in retirement, although this amount varies according to factors such as whether you still have a mortgage, whether you are eligible for the age pension and, of course, how long you live.

Using advice tools that are accessible from the comfort of your own home can help you start painting a clearer picture for retirement. There are also several resources on our website that help break down key concepts.

Once people know if they’re on track, they can make smart choices such as changing their investment profile to earn a bit more or making voluntary super contributions.

How often should I check in on my super?
It’s not as often as people think.

When you’re younger and you know you’ve chosen a fund that can deliver you good long-term returns and low fees, then it’s those big life moments like having children when you may need to adjust your insurance or when you have a pay rise and may have a little extra money to save.

Retirement is one of the biggest moments in your life, so thinking about this early; getting some expert help to make good choices is important. You don’t have to know it all at once, but small steps often make a big difference in the long run.

What are some tips to boost my super?
Voluntary contributions are a great way to boost your super. We know that through the magic of compound interest, $1 today is $3 in retirement.

For younger people, contributing $10 a week today is far better than having to contribute $150 a week if you start at age 45 just to get the same results.

The great thing about voluntary contributions is that they are voluntary, meaning you can stop and start whenever you want and change how much you contribute.

For most funds, this can be done online, through an app or member portal on the website in minutes.

What small steps can I take now?
Getting advice makes a difference. We know members who educate themselves about their super are up to 2.6 times more likely to take action and boost their retirement success.

Our experts help them make sense of the secrets of super, such as how to maximise retirement income through government incentives and support like the age pension.

We also provide the Super Helpful Check-In and Retire Ready Check-In at no extra cost to members and it’s great to chat to an expert to make sure you’re on track.

Aware Super’s My Retirement Planner advice tool can help determine what to aim for, in terms of retirement date and how much money is needed. It uses long-term averages on inflation and investment returns.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.