Super is not a short term discussion
In the course of your life you may have many savings and investment objectives with a range of short to long term timeframes. Saving for a holiday or a used car in your younger days may take a year or two. A home deposit will take a little longer. Once you actually invest in a home, it may take 30 years or more to pay off.
The longest and perhaps most significant of all your investments, however, is your super. It will build throughout your entire working life and can potentially become your largest asset. Even after you have completed the contribution and accumulation phase, your retirement funds may still remain within the tax-protected super environment as you draw down on it during retirement.
The scope, span and size of your super, therefore, deserves to be considered more deeply than any other area of your financial life. It needs to be wisely invested, tax-effectively structured and properly maintained so that it meets your retirement lifestyle expectations.
The dangers of indifference
Despite its pre-eminent position in most people’s financial future, there is a general tendency to leave superannuation on ‘autopilot’ and not take an active interest in its management and investment. This approach can put you at a serious disadvantage in terms of your ultimate retirement outcomes. To get the most out of your super and to ensure you have an adequate strategy for retirement, it is critical to become engaged with it and to get the right advice about how to maximise your position. The question is: who do you trust to get that advice?
Beware who you listen to
The danger in the current volatile superannuation environment is that there are a lot of voices in the public domain clamouring to put in their two cents on what is best for the future of superannuation. The unfortunate truth is that many of these are vested interests that have short-term or partisan aims in mind. Political parties of all stripes, trade unions, think tanks, lobbyists and special interest associations seem to all be pushing their own agendas and many of these opinions may not necessarily be in accord with your long term retirement interests.
The current push to make major changes to superannuation legislation is intensifying this public conversation and this may be adversely influencing the decisions of our legislators. As a result, some of the proposals they are promoting can have serious impacts on your retirement prospects.
Take for instance the issue of retirement ages. The idea of increasing the retirement age up to 70 has been floated in recent times and although public outcry has stifled this move for now, it is inevitable that it will rear its head again. Not a pleasant thought if you are a farmer, tradesperson or work in industries which require manual labour
Another controversial move has been to make retrospective changes to super regulations with the intention of limiting taxation incentives. Such actions are often motivated by short-term political concerns with little regard for the long term impacts on your retirement. Those who have planned their post-work future on the basis of previously well-established rules are consequently finding that they may end up worse off.
The result of this instability and ‘barrow pushing’ is a climate of fear, which may well undermine confidence in the superannuation system and deter people even further from being proactive about their retirement planning.
So who should you be taking advice from?
Your super is a major asset that warrants your active engagement so that it is managed and invested in a way that reflects your personal choices. The complexity of superannuation regulations and the taxation system, however, can make this quite a daunting prospect to deal with by yourself. Few of us have the time or inclination to become super experts ourselves and this is where the value of qualified, personalised advice can come into its own.
One of the key foundations of contemporary financial advice is that it must be based a close understanding of a person’s particular objectives, lifestyle circumstances and investment personality. Qualified advisers these days are trained in being able to help their clients to identify and crystallise these issues, so that a highly individualised strategy can be developed. The days of a ‘one size fits all’ approach to superannuation are long gone.
Another key advantage of obtaining professional advice on your super is that it is based on a long term relationship, not a quick fix. Circumstances change, objectives evolve and the investment environment fluctuates. A big part of an adviser’s role is to help you adapt your planning to cope with all of this. At the same time they have access to market and legislative research and analysis, which allows them to provide the kind of fact-based, objective guidance needed to capitalise on market and legislative movements.
The current state of flux around superannuation and the chorus of strident voices from vested interests make it more vital than ever to have sound, qualified advice in your corner to make sense of it all and to ensure that your financial well-being is championed above all.