Article by Stephen Nadin courtesy of The Courier Mail.
Data shows investing extra money into superannuation is becoming the new norm for Australians.
A survey of more than 2000 Australians, conducted by Equip Super, found they are beginning to invest more in their super well ahead of their retirement.
Nearly one in two (46 per cent) have made voluntary contributions to top up their super over their working life, with around two thirds (65 per cent) first making voluntary contributions before turning 40.
After Covid, with inflation becoming front of mind for many and increasing global economic uncertainty, Australians are reassessing the importance of superannuation as a way to safeguard their future.
The survey also proved retirement is no longer back of mind for many Australians. Equip found nearly two in five (39 per cent) Australians consider their super more important now than prior to the Covid pandemic, with around a third (31 per cent) saying they think about their retirement plans often.
Although they are many years away from reaping the benefits of super, young people (18 to 34 year olds) were found to value their superannuation even more highly than their older counterparts, with 47 per cent of this age group viewing superannuation as more important now than they did two years ago, compared to only 30 per cent of those aged 55 and over.
“Australians are seeking stability for their future, including their retirement plans, even if they’re many years away,” Equip chief
executive Scott Cameron said. “Making extra contributions to your super is a great way to build towards the retirement you want.
” Voluntary contributions allow Australians to invest extra money into their superannuation, where it can build their savings across their career to ultimately supporttheir retirement.
The benefit of super can be the compound interest which accrues over the longer term, with earlier contributions having a substantial impact.
Australians can also pay less tax on contributions made directly from their wage before tax, known as salary sacrificing.
As salary sacrifice contributions are only taxed at 15 per cent, this can provide valuable savings on tax while building super balances.
“It’s fantastic to see more and more Australians taking an interest in their financial future, and taking action to boost their superannuation early on in their working life,” Mr Cameron said.
“Any small contributions you can make now will add up, and support you when it comes time to retire.
“There’s no better time to start contributing than the present.
“It’s easy to dismiss retirement planning as something to consider after other major life milestones, such as embarking on a career, starting a family or purchasing a property.
“But the reality is retirement planning should begin early in your career and be revisited throughout your life.”
Meanwhile, an increase to the age pension has been welcomed.
The maximum rate of the single age pension rose by $37.50 per fortnight – taking the single age pension from $1026.50 to $1064 – and for couples, by $56.40 per fortnight – taking their payment from $1547.60 to $1604.
National Seniors Australia chief advocate Ian Henschke said under the current system, pensions were adjusted every six months, in March and September but this left recipients playing a costly game of catch up when inflation was unusually high.
“The Federal Government should index the pension every three months during times of high inflation to help those most vulnerable,” he said.
“National Seniors Australia recognises our system adjusts for rising cost of living, but it is critical during times of high inflation that we adjust four times a year instead of two.
“For pensioners struggling to cover necessities such as food, fuel, and electricity, how often is as important as how much.
“We also want a two-year trial for pensioners who want to work and work more.
We need an NZ-style system that eliminates Centrelink reporting and requires pensioners to pay an agreed rate of income tax.
It’s simple, fair, will help solve critical workforce shortages and boost the budget bottom line.”
