Superannuation is specifically designed to help you save and invest for your retirement.

It’s all about helping you take control of your own retirement, rather than rely on the age pension.

It’s your money!

When you first start in the workforce, it’s easy to dismiss super as money you can’t access or ‘lost’ money. It’s out of sight, out of mind.

After all, retirement is a lifetime away. And you probably have more pressing concerns, like saving for your Euro trip, paying off uni fees and organising the weekend get-together.

But fast forward a few years and the picture can be quite different. For many people, super becomes their primary retirement savings vehicle, thanks to the regular super guarantee (SG) payments their employer makes.

Since being introduced in 1992, SG payments have gradually become a part of our working lives. The 9% SG payments are set to increase to 12% over the next seven years to help Australia’s ageing population save more for their retirement.

A view to retirement

But despite the SG increase, Australians are becoming less prepared for retirement.

The latest AMP Retirement Adequacy Index shows the average worker can expect to retire on just under $49,000 per year – the lowest level since the global financial crisis began in 2007.[1]

After five years of market uncertainty, it’s understandable that many Australians are cautious of putting extra money into super. But you don’t have to spin the roulette wheel. There are plenty of less risky ways to invest your money in super, including term deposits.

And super remains a tax-effective way of saving for retirement.

Super is tax-effective…

Money in super is taxed differently to your other investments. It’s designed to reward you for investing for the long term – when you put money in, while you’re earning investment returns and when you take money out, in retirement.

For instance, pre-tax (concessional) contributions you make to your super up to $25,000 per year and investment earnings on super are taxed at a maximum rate of 15%, which is lower than most people’s marginal tax rate. And when you withdraw super money after age 60, the withdrawal is tax free.

…and offers a wide range of investments

Super providers offer a variety of investment options, which may be suitable depending on where you are in your life.

Conservative funds typically invest more in low-risk assets that may deliver more consistent returns. Balanced funds generally attempt to strike a balance between risk and return. Growth funds typically invest more in high-growth assets with more risk of volatility. And there are plenty more options for investors keen to exercise more control.

Platforms give you access to managed funds, shares, term deposits and exchange-traded funds. And an increasing number of Australians are going DIY – in fact, as at 30 June 2012, self-managed super funds held the largest proportion of super assets accounting for 31.3% of total super assets.[2]

However, while different investments have different risk and return strategies, you should remember that generally, investments are subject to investment risk, which means that your investment and investment returns are not guaranteed. You may experience negative returns, and future returns may differ from past returns.

What sort of investor are you?

Getting the right investment mix can really make a difference. You’ll need to think about:

  • when you want to retire
  • how much you’ll need to enjoy a comfortable retirement
  • how much risk you’re prepared to take on.

Generally, younger investors are more comfortable with risk to achieve higher returns, while older investors are more concerned with protecting their assets.

New Year – new plan

The New Year could be the perfect time to put a plan in place to boost your super. Call us today on to find out what strategies could work best for your personal circumstances.


[1] Source: AMP. (26 September 2012). Media release: Retirement adequacy falls as Australians remain cautious.

[2] Source: Australian Prudential Regulation Authority. (23 August 2012). Statistics: Quarterly superannuation performance June 2012.

What you need to know

Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning Pty Ltd and other companies within the AMP group will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.