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Super’s role in gaining your independence


Published 1 August 2017

Many Australians put their future independence at risk because they don’t know the important role super plays, writes Gayle Bryant.

  • Australians want independence and see money as important to achieving it.
  • We know superannuation is central, but don't really understand its power.
  • Some of us are dangerously underestimating how much super we need.
  • But there are essential steps to take control, and they're explained here.

Research, commissioned by ANZ, makes it clear that independence is a priority for the vast majority of Australians (71 per cent) – both now and in the future. ANZ’s survey showed Australians feel independent in their life, and believe money plays an important role in gaining and maintaining that sense of independence – but most were confused over how superannuation fits into this.

Over a quarter of Australians don’t know how much super they have, and many are wildly wrong about how much they need to have a satisfying, independent life post-work.

What the research found

ANZ’s in-depth survey of 1,000 Australians in March 2017 found ‘independence’ is a priority for most Australians. The majority (73 per cent) of Australians say they feel independent – a state they define as being “secure, safe, happy and responsible for their own lives” – because they can look after themselves financially.

Women are significantly more likely to feel that independence means “not having to rely on others”, while men feel “being in control” best describes it.

And what role does money play in people’s independence?

  • One third say independence is “financial freedom”.
  • About 20 per cent say it's not having any debt.
  • For 30 per cent of Australians, independence is “having enough money to live my life”.
  • About 40 per cent say superannuation is a key asset in their plans to live a fully independent life.

Super-charge your independence

Almost all Australians are thinking about the money they’ll need in retirement.

Superannuation is a key strategy to save long term (for 20 per cent, it's their only strategy), but many Australians also plan to continue working and develop other savings to give them the independence they're looking for in life.

Even though super has this important role, when it really comes to getting a grip on super, things start to go fuzzy for Australians.

What many Australians get wrong

  • A quarter of us have more than one super account, meaning fees are eating more of our savings than they should.
  • 1 in 8 don’t know what super is for, or believe it has no purpose. In fact its specific purpose is to give us future independence.
  • 15 per cent don’t know their super balance. This indicates we’re not managing it to bring about the independence we say we want.
  • Most (72 per cent) of us are concerned we’ll have inadequate funds for retirement (a bigger concern for women than men), suggesting we don’t have a plan in place.
  • About 38 per cent believe a super balance of less than $300,000 will be enough to retire on, which is an unrealistically low estimate.
  • And 31 per cent of 18 to 34 year olds believe they’ll need less than $100,000. These expectations are not grounded in reality, as $100,000 would only last a few years.

How Australians are putting their future financial independence at risk

How Australians are putting their future financial independence at risk (PDF 870kB)

Research commissioned by ANZ shows that many Australians don't appreciate the crucial role super plays, and how contributing to super today can lead to a more secure future. 

 

The survey shows that:

  • 1 in 8 don't know what super is for or believe it has no purpose (when in fact, super can be your biggest asset for retirement). 
  • 1 in 4 people have more than one super account, meaning you could be wasting up to $40,000 in excess fees.
  • 76 per cent of women are concerned about when they can retire.
  • $1,000 invested today by a millennial is equal to $4,000 or more in retirement, in today's dollars.
  • 15 per cent don't know their super balance, yet young Australians tend to have more money in their super accounts than in the bank. 


Thinking versus reality:

  • 31 per cent of 18 to 34 year olds believe they will need less than $100,000 to retire on. In reality, this will only last two to three years. 
  • 38 per cent believe that a super balance of less than $300,000 will be enough to retire on. In reality, a single person will need $545,000 for a comfortable retirement - or $895,000 without the aged pension. 

 

 

Katrina Horrobin, from The Association of Superannuation Funds of Australia, says financial independence is very important for all Australians in retirement but not everyone achieves it.

“The age pension is sufficient to avoid absolute poverty in retirement but just avoiding poverty is not a goal that Australians aspire to,” she says. “Superannuation is the key to financial independence and to a life of greater dignity and comfort in retirement.”

By giving your superannuation some attention, you have the opportunity to make sure it successfully meets the goals you have. Really, it’s one of the easiest ways to achieve financial freedom and independence in retirement. Now’s the time to take charge.

Try these steps to get more control of your super

1. Know your balance

Get online or call your fund – as a first step, know how much super you have.


2. If you have more than one super account

Consider rolling it all into one so fees don’t eat away your savings.


3. Work out what a comfortable retirement means to you

Speak to a financial planner or work out yourself how much super you need to have a comfortable, independent life (these calculators can get you started).

Take charge of your independence

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