A report just released, ‘Not so super for women’ has certainly highlighted issues surrounding wo- men and their retirements. As the title suggests, our current superannuation system, introduced back in the 1990’s, is failing to provide adequate savings for anyone who has not enjoyed continuous employment.

And there are no prizes for guessing which section of the population that impacts on the most. That’s right, women, who make up roughly half the population, are being ‘penalised’ for raising a family and therefore spending long periods away from paid work. As a result, it plays havoc with their superannuation savings.

And it becomes most acute for those women who, after devoting themselves to family life, find themselves without a partner for whatever reasons, in their later years. Yes, I am aware of the legislation surrounding divorce and superannuation assets, but it still highlights an incredible anomaly in a system designed primarily for the whole population.

Unfortunately super is as about as good as it gets at the moment. Each new Government always announces boldly that they will never, ever, alter super, only to alter super at their next budget. And these alterations always take benefits rather than improve, contrary to Government assurances.

So until we do get a revision of superannuation legislation it remains with the individual to improve their ‘lot’ as best they can. Unfortunately, there is no adequate replacement for continuous contributions, when it comes to building a nest egg.

But individual’s can certainly improve their superannuation balances by just being a bit more knowledgeable. Contrary to what financial institutions would have you believe, super as a concept is very simple. It is a long-term investment, for retirement only, which has been bequeathed a good tax treatment.

And there are three critical elements impacting your final balance. The first is the contributions made to your fund. But as you have seen, this is not always a constant, particularly if you’re a woman. But employer contributions are only one of various ways money can be put into super.

It’s not only company contributions that go into super.

Contributions can be made from any accumulated funds or from proceeds of assets you’ve sold. In fact, any way you can generate cash can all go towards your super! There is, however, limits as to how much can be put in, so check what they are before you act.

And remember, the money you put in will have to stay in your superannuation until you are retired. So only commit funds that are not required for any other purpose.

The fees charged to your superannuation

A very simple way to begin improving your super almost immediately is to take a close look at the costs. Simply by reducing your current fees will add huge amounts to your final balance. Don’t become complacent or sentimental about your current fund and shop around. Click here for some help on how you can do it.

And here is a fantastic site to compare your fund with all the other funds. It refers to funds that charge a lot of fees as fat cats, so check out if your fund is a fat cat.

Investing and your superannuation

As for investing your funds, you need to factor your age, how long before retirement and the types of risk you are comfortable with. These three areas are important guides when investing in risk assets such as shares and property.

Because of their volatile nature, adequate time is needed to recover lost value and move forward. The closer you are getting to your retirement date, the less risk you should take.

It is a good idea to work in 5-year segments. Just break your time to retirement into chunks of five years and alter your strategies at the beginning or the end of the period. You reduce the risk in your super fund by reducing your exposures to property and shares and increasing fixed interest and cash. By retirement time you should have most, if not all, your funds in cash.

As a matter of interest, I always advised my clients to put all their super funds in cash at least one year out from retirement. This ensured that retirement planning was done with a guaranteed amount rather than be at the whim of markets.

This strategy actually saved many clients from some truly calamitous events which would have otherwise decimated their savings. Oddly, not one of my colleagues within the advice industry ever agreed with my strategy. It was always difficult for many advisers to ‘marry’ technical knowledge with fiduciary action. Oh well.

Superannuation and risk

When you are looking at your risk appetite, don’t short change yourself in regards to potential in- vestment returns. At any given point in an investment cycle, you will always have ‘doomsayers’ and ‘raging bulls’.

Both can be as dangerous as each other. One is talking the market down which makes for very cautious investment strategies. Whilst the other is singing the praises of an endless boom which is certainly a prescription for some very complacent investing.

So always listen to a range of opinions but hold your own when it comes time to invest. I have prob- ably heard more “Gee I should have..” or “If only I had…” than “Boy, I wish I hadn’t done that..” in my career. So stay brave when investing.

And just to help visualise your thoughts, think back 10 years. Are there any investments you wish you had done back then, knowing what you know now? If the answer is yes, then guess what, this is the beginning of the next 10 years!

It can be quite the eye opener looking back and reflecting on all the major world events, calamities and economic upheavals we have experienced. Yet, through all that, public companies have still grown their share price and are still producing ever increasing dividends. And the same can be said for property prices, and gold, also silver and let’s not forget collectibles.

In fact, whatever trials and tribulations have visited the world there was always an underlying optimism that reflected an innate desire to make money. Unfortunately, you just didn’t see the wood for the trees at the time. You need to understand that the perception of risk is often much greater than the actual long-term effects of that risk.

For example, think back to the IPO of Facebook or when Bitcoins were released. Who wouldn’t like to own some of each now? But at the time, investing seemed so risky. Well, these types of opportunities are being presented constantly, both existing and new.

So think very carefully about the very long-term nature of superannuation before you settle on an asset allocation for your fund. Remember, what is happening today, won’t last forever.

As I said earlier, there is absolutely no substitute for regular contributions to building your retirement funds in superannuation. However, there are plenty of other strategies you can adapt to improve what you do have in your fund. I have seen many people who have had their balances whittled down by fees and insurance premiums and all sorts of investment strategy ‘cock-ups’. It just doesn’t need to happen.

So if you are out of the workforce for any length of time, take the opportunity to fill up any ‘leaks’ in your fund. Spend some time researching and getting to know about investing. I promise it will pay incredible dividends if you do.

Make sure to look at the other posts I’ve suggested, and if something isn’t explained or if you have any questions, just leave a comment below or send me an email via the contacts page. I would be more than happy to try and assist you.

Thanks for reading and I look forward to seeing you again. Homepage