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Can a few extra dollars really make a difference?

Extra payments into super, no matter how tiny, can do a lot for your balance. It doesn’t have to be a regular amount or a big lump sum to make a difference.

More bang for your buck
Putting money away for spending in 10, 20 or 30 years’ time is a lot to ask. But apart from having more income to look forward to in retirement, there are other incentives to get you saving a little more into super.
Here are five great reasons to save just a little bit into super, starting right now:

1. More money for your future retirement
Saving for retirement shouldn’t mean going without now so you can have more to spend later. But it’s also important to get the balance right between enjoying quality of life while you’re still earning and in the future when you’re not. Putting even a little extra into super can help you meet your savings goal for a comfortable life in retirement.
So it’s well worth weighing up whether $4 for one more take away coffee each week is worth it compared with the extra $20 you could be putting into super each month. That’s $240 a year and around $10,000 during your working life. And with the magic of compounding that $4 a week could see you a lot better off by the time you retire.
2. Savings on your tax bill
Saving a little into super instead of a regular savings account has another silver lining. Depending on how much you earn and the highest rate of tax you’re paying (your marginal tax rate), you could save on tax for every extra dollar you put into super.
3. Extra super savings from the Government
Helping yourself with extra super payments can also see you get help from the Government. If you’re on a low income, you’ve got two ways to make payments into super and have the Government put more money into your super fund.
•    Low Income Super Tax Offset (LISTO): This handy acronym means that the Government will pay a tax offset straight into your super account if your adjusted taxable income for a year is $37,000 or less. The LISTO is worked out as 15% of the concessional contributions (including before-tax contributions such as SG and salary sacrifice) you or your employer pays into your super fund, up to $500. It all happens automatically when your super fund reports the contributions they received on your behalf to the ATO, as long as your super fund has your Tax File Number.
•    If eligible, your LISTO payment from the Government can be as much as $500 or as little as $10 depending on your adjusted taxable income in a financial year and how much extra before-tax contributions you or your employer have paid into your super in the same period.
•    Government co-contributions: if you are a low to middle income earner that meets certain requirements and make extra payments into your super fund the Government will make a payment of up to $500 towards your super in a single year. Just like LISTO you’ll need to be earning less than a certain amount to be eligible and it all happens automatically when you lodge your tax return with the ATO. But to get the Government co-contribution, you’ll need to make your extra super payment as an after-tax (or non concessional) contribution.
4. Your money earn more money
By saving into super instead of a regular savings account, you have the freedom to choose how your money is invested. Particularly when interest rates on regular deposits and even term deposits in the bank are low, investments can offer you the potential to earn more from your savings, depending on the type of investments you pick.
5. Your super keeps growing during a career break
If you stop earning for a while, super guarantee contributions from your employer are on pause too. You might take time off to travel or study, or care for kids or other family members. But this is a time when even a small break in your super contributions can have a big impact later on. This is why the Government offer to chip in and help out with your retirement savings when your paid income is lower or non existent and you still manage to make extra payments into super.
If you’re one half of a married or de facto couple and taking time off from paid work, there’s another way to make sure your super doesn’t suffer a setback. Your partner can make some additional contributions for you to keep your balance growing and as a way for you to benefit from extra help from the government. And if you’re the one helping out your spouse with their super savings, it can put money back in your pocket too. Making a spouse contribution could mean you’re eligible for a tax offset of up to $540 less on your tax bill for the year.

Make super savings easy
It’s really hard to stay motivated to save into super as it’s money for a time that’s far away from now. This is why you need to make super savings, small, easy and regular with automated payments. $10 or $20 a month paid into your super with salary sacrifice is perhaps less than you spend on take away coffees or your streaming subscriptions. If it’s an amount that you won’t really miss from your everyday cash flow, then make a commitment to save it in super instead. And as you start to see the benefit of how that extra amount could add up in your super balance and annual statement, perhaps you’ll get motivated to make it $50 or $60 each month instead.

Source: MLC
 

Financial strategies for women over 50

Many women in their 50s are asking themselves: “How do I prepare for retirement without financial stress? Can I reduce my working hours or transition to a new career without jeopardising my future?”  
If you’re wondering the same, you’re not alone. The good news is that with the right strategy and advice, you can build financial security while designing a truly fulfilling life.  
Let’s explore strategies to help you make informed choices. 

Understanding life expectancy and living arrangements 
In Australia, a 50-year-old woman today can expect to live until about 87 years. Additionally, many women find themselves living alone as they age. As of 2021, 55% of individuals living alone were women, with half of these women aged 65 or older. If you retire at 60, your retirement savings will need to last for approximately 30 years! So it’s important to ensure you’re prepared for a secure and independent life. 

Assessing your retirement readiness 
1.    Envision your retirement lifestyle: Consider where you’d like to live, the activities you’ll pursue, and any travel plans. This vision will help estimate your future expenses. 
2.    Estimate your expenses: The Association of Superannuation Funds of Australia (ASFA) suggests that, for a comfortable retirement at age 67, single individuals need an annual income of approximately $51,814, while couples require about $73,031. These figures assume home ownership and good health and reflect a typical year of expenses, but you should also remember to account for one time expenses like home improvements, relocation or purchasing a new car. 
3.    Evaluate your superannuation balance: ASFA recommends a superannuation balance of $595,000 for singles at age 65. However, data indicates that Australian women aged 60 to 64 have an average balance of about $318,203. This gap highlights the need for many women to boost their retirement savings. 
4.    Identify income sources: Determine where your retirement income will come from, such as superannuation, investments, rental properties, part-time work or government pensions. Diversify your income sources to create long-term financial stability. 
5.    Plan for emergencies: Set aside accessible funds for unexpected expenses, like medical emergencies or urgent repairs, to avoid disrupting your long-term financial plans. 
6.    Assess investment risk: As you approach retirement, consider adjusting your investment portfolio to align with your risk tolerance. While growth is essential, preserving capital becomes increasingly important. 
7.    Seek professional advice: Work with a financial planner to develop a tailored plan that aligns with your goals. Professional guidance can provide clarity and confidence in your financial decisions. 
 
Considering career changes or reduced work hours 
Contemplating a career shift or reducing work hours in your 50s is common. To ensure these decisions don’t compromise your financial wellbeing: 
•    Analyse the financial impact: Understand how a change in income will affect your savings trajectory and retirement timeline. 
•    Explore flexible work options: Consider part-time roles or consulting opportunities that provide income while offering flexibility. 
•    Upskill or reskill: Invest in education or training to transition into roles that may offer better work life balance or fulfillment. 
•    Network actively: Leverage professional networks to discover opportunities that align with your desired career path. 
Overcoming common roadblocks 
Several challenges can impede financial goals in later life, including supporting children, caring for elderly parents, health issues or unexpected redundancy. Additionally, self doubt or lack of confidence can hinder proactive planning. To navigate these obstacles: 
•    Set clear boundaries: While it’s natural to support loved ones, ensure it doesn’t jeopardise your financial security. 
•    Prioritise self care: Attend to your health and wellbeing to maintain the ability to work and enjoy retirement. 
•    Stay informed: Educate yourself about financial planning to make informed decisions. 
•    Build a support system: Surround yourself with professionals and peers who can offer guidance and encouragement. 
Enhancing your retirement savings 
Given that many women have superannuation balances below recommended levels, consider strategies to boost your savings: 
•    Make additional super contributions: Take advantage of contribution rules to grow your superannuation. 
•    Eliminate debt: Aim to pay off outstanding debts before retirement to reduce financial burdens. 
•    Optimise investments: Review your investments to ensure they align with your retirement goals and risk tolerance. 
•    Consider government Social Security entitlements: Explore the Age Pension and other government benefits that can supplement your retirement income.
 
Approaching retirement and considering career transitions in your 50s requires careful planning and self reflection.  
By envisioning your future, assessing your financial situation and seeking professional advice, you can make informed decisions that support a comfortable and fulfilling retirement.  

Remember, it’s never too late to take charge of your financial future.

Source: Money & Life
 

Financial goals guide 2025

Your future's on the line. Don't stay on hold in 2025.

Is it March already? It’s time to start nurturing your future self by doing this one thing to get your long-term finances in order. Nine in 10 wealthy Australians are quietly doing it already*, new research from Colonial First State (CFS) shows. 
If it still feels like you just left 2024 behind, time may be flying by so fast it’s hard to plan for the weekend, let alone for something that may be years or even decades away. 
New research from CFS bears this out, revealing only two in five* Australians feel prepared for life after work and less than half expect to be able to live comfortably when they get there.
Getting on top of your finances is one of the most common new year’s resolutions, set by one in two Australians, according to new research from the government’s Moneysmart website. Despite that, only one person in eight sticks to it.
In contrast, new CFS data on the secret strategies of the wealthy indicates that nine in ten of the well to do have set a long-term financial goal, such as identifying the age at which they want to stop working. 
So, as 2025 gathers momentum, CFS have put together a plan to help you look after your future self by taking one crucial step towards getting your long-term finances in order.

The importance of setting a financial goal
A key difference between those who have planned well for their long-term future and those who haven’t is making the decision to set a specific, long-term financial goal. 
This might be the age at which you want to retire. You might want to travel for a year when you stop work. Maybe you’re planning to move or take up a new hobby.
Whatever it is, once you’ve got a vision for your long term future, you can establish the short term and medium term goals to help you get there. 

The long and the short of it
Most people will have a mix of short-term and longer-term financial goals that are very personal to their needs. 
The beauty of setting short-term goals is that once you are in the habit of setting money aside to achieve them, it should be easier to maintain that discipline and direct that money to achieving your longer-term objectives. 
•    Short-term goals are things you would expect to achieve within the next five years.
These might include paying off credit cards and other higher interest debts, getting your super in order, saving for a holiday, accumulating an emergency fund or buying a car.
•    Medium-term goals are those you might achieve in a five to 20 year time frame.
Saving for a house deposit or creating an education fund might fall into this category.
•    Long-term goals might include things like paying off your mortgage, making additional super contributions or investing outside your super.
 
Get smarter about goal setting
When it comes to determining your goals, it’s important to set what are known as SMART goals, which means they should be:
•    Specific
•    Measurable
•    Achievable
•    Realistic
•    Time bound.
In practice, rather than aiming to “save more”, an example of a simple, short-term SMART goal might be “set up an automatic deposit of $25 a week to pay off my $1,000 credit card debt by the end of 2025”.

How super can help you save
We know from the CFS research that the biggest regret of people as they approach retirement is not contributing more to their retirement savings. In fact, it’s the most common reason people feel they are off track financially, experienced by almost three in five Australians.
Using your super to save and preserve those savings for when you ultimately stop working, is a great way to help prepare financially for the long term.

The earnings your super makes are generally taxed at 15%, which is lower than many people’s marginal tax rate. This means your savings are likely to compound and grow faster. 
As the earnings on your super are reinvested and taxed at a lower rate than earnings outside super, you can generate returns on your returns, leading to exponential growth over time. 

Compound returns in action in super
Even small, regular contributions to your super can grow significantly. It works even better if you start early and remain consistent, although there are ways to leverage the benefits of super at any age.
For example, say you decided to give up one takeaway meal a week, saving $25. If you make a $35 pre-tax voluntary contribution to your super each week (assuming a 30% tax rate this would leave you $25 less in your take home pay), here's how it could compound and contribute meaningful amounts by the time you retire^:
•    $89,980 if you start at the age of 30
•    $56,622 if you start at 40
•    $30,264 if you start at 50.
If you set up a salary sacrifice contribution through your employer using pre-tax income, you might not notice much difference to your take home pay after tax is taken into account. 

Month by month steps to establishing your long-term financial goals
So, if you only do one thing for your financial future this month, try setting your financial goals. 
Then do one more thing each month between now and the end of the financial year to organise your finances so you’re more prepared for when you eventually stop working.
MARCH: Set your financial goals
Set your short, medium and long term goals, and make them specific, measurable and achievable.
How much will you need to retire? Use a Retirement Calculator to determine how much money you will need for the lifestyle you want when you stop working. 
APRIL: Understand how your super is invested
Review your super to ensure it is invested to suit your risk appetite, timeline and financial goals by logging into your account or downloading our mobile app. 
Growth options may generate more money at a higher level of risk that may be appropriate if you have a longer investment time frame. 
You can use the ATO’s online tools to check for any lost super accounts and consolidate them into your main super fund. This can help reduce fees and make it easier to manage your super. 
However, it’s also important to check you won’t lose key benefits that your provider may offer, such as insurance. 
MAY: Make an additional contribution
There are many ways to make a tax effective extra contribution to your super including:
•    salary sacrifice
•    personal tax deductible contributions.
Other ways to contribute include:
•    after-tax contributions
•    spouse contribution
•    downsizer contribution (may be applicable if you’re aged over 55 and you meet the eligibility conditions).
Be aware your money will be preserved in your super until you meet the conditions of release or satisfy other special circumstances.
JUNE: Can super help you catch up or get ahead?
Consider whether you can catch up on super you may have missed out on if you took time out of the workforce, or think about other ways to boost your super balance, including:
•    Making a pre-tax contribution using the carry forward rules
•    Making an after-tax contribution using the bring forward rules
•    Saving for a first home deposit faster using the First Home Super Saver scheme.
JULY: Double check the basics
Assess your insurance cover within your super to ensure its adequate for your needs. This includes life insurance, total and permanent disability (TPD) insurance, and income protection insurance.
Make sure you have nominated your beneficiaries to ensure that, in the event of your death, your super passes to those you intend as your super doesn't form part of your will.

Remember, if you need more help, speak to a financial adviser.

It’s also important to update your beneficiaries when something changes, such as having children or ending a relationship.
* Rethinking Retirement 2025, commissioned by CFS and conducted with more than 2247 Australians from July-September 2024. 
^  These calculations are based on modelling provided by moneysmart.gov.au - superannuation calculator, using the following assumptions: ages as indicated, salary $80,000PA, retirement age 65, superannuation starting balance of $65,000, employer SG plus weekly $36.76 voluntary pre-tax contribution, earning rate 7.5%, effective tax rate on investment earnings 7.0%, investment fees 0.85%, fund fees $74, insurance costs $214, 2.5% inflation, 1.5% additional rise in living standard. Tax rates applicable for the 2025-26 financial year. 
 
Source: Colonial First State
 

Insurance through super: everything you need to know
Did you know you can have insurance cover in your super fund?
If you have super, you might also have some automatic insurance cover.
It’s called insurance in super and is exactly what it sounds like – insurance cover available through your super account.
Insurance in super is designed to assist you and your family financially if you become unable to work due to illness or injury or in the event that something happens to you.

Why get insurance through your super?
Having insurance through your super can help protect you and your loved ones when you need financial security the most.
Insurance in super can also be tax effective and convenient. This is because the cost of your insurance cover, also known as premiums, are deducted from your super account – which means your take home income won’t be impacted.
When you have insurance in super, the premiums are paid from your super balance. This means you don’t have to pay premiums from your own pocket. However, your employer may, or you can make contributions to assist in funding the premiums. It is important however to check how much you’re paying in insurance administration fees and be aware that having insurance in super will reduce your super balance.

Types of insurance cover 
Death insurance cover

• If you die or you’re diagnosed as likely to die within 24 months due to a terminal illness – you’ll be able to financially assist your loved ones through a lump sum benefit.  

Income Protection insurance cover

• If you’re unable to work due to illness or injury, Income Protection cover can provide you with ongoing income and financial support by paying you a regular income.

Total & Permanent Disablement insurance cover

•  If you become totally and permanently disabled, Total and Permanent Disablement (TPD) cover can help ease financial pressures by paying you a lump sum benefit amount.    
   

Find the right insurance cover for you
The right level of cover for you depends on your personal circumstances, lifestyle and future needs.
When you look at insurance cover and how much you need there are several things to consider, including:
•    Day to day living expenses that your salary covers.
•    Any debts – mortgages, credit cards, personal loans.
•    How much income you (and your family) need to live comfortably.
•    Future costs such as medical care, education for your children or yourself, and the costs associated with anyone you support financially.
 
How much does insurance cost through super?
The cost of your insurance cover may depend on your age, gender, occupation, medical history, health factors, lifestyle, income and employment arrangements.

Things to consider with insurance through super
It’s important to know that your retirement savings are reduced by the cost of your insurance premiums. That’s because premiums are deducted from your super balance to pay for your insurance cover.
You need to check what other insurance cover you may have. If you have more than one super account, you may be paying premiums for multiple insurance covers you may not need. This will reduce your retirement savings, and you may not be able to claim on multiple covers. You can search for any other super account you may hold online using MyGov. You may also hold insurance cover outside of your super account.
The type and amount of insurance cover that’s right for you depends on your personal, family and financial circumstances – as well as your income and lifestyle. As an example, an expanding family or a reduction in personal debt may impact your choice of the type and amount of cover you have.
A financial adviser can help you decide the insurance cover that’s right for you and way to pay for your premiums in super. 

Keep an eye on your insurance cover
You should be aware that your insurance could be cancelled if your account hasn’t received contributions for at least 16 months, unless you have elected to keep it.
If you want your insurance cover to continue in an existing super account which hasn’t received any recent contributions, you need to contact your fund and opt in to retain any insurance in your account or make a contribution to your account.

Source: MLC