Burying your head and ignoring your Super is a mentality could cost you hundreds of thousands of dollars, but reviewing one particular aspect could turn that all around, research by MLC reveals.
According to new research from MLC, a lack of member awareness about their superannuation risk profiles is costing Australians, and particularly young women dearly.
We blame Aussies’ for burying their heads in the sand and totally ignoring their super. The solution is simple by engagement with a fiancial adviser. Being in the right investment risk profile is one of the key factors that will determine how much you have when you retire, but it’s often overlooked.
As an example of the difference it could make, a woman aged 24 on $80,000 a year in a conservative risk profile until she’s 70 could improve her super balance by around $300K if she adjusted her profile according to her circumstances and life stage.
The risk profile is a means of identifying where members sit on the investment risk-taking spectrum by measuring risk tolerance to fluctuations in investment value. People who choose, aggressive, moderate or conservative will most likely end up with different returns, but preference depends on life stage, financial position, time frame and general investment appetite. As such, most Australians will need to change their risk profile as their lives change.
MLC research revealed that 45% of young women said they do not know their risk profile, something Heart Financial Advisers considers concerning given that the average Australian woman has about 50% per cent less in super than a man of the same age.
If Australians cast an eye over their risk profiles and check that it’s appropriate. If there’s one thing every Australian can do right now to improve their retirement it’s to get in touch with a financial adviser and check what their appetite for risk is and and adjust it accordingly.
MLC’s research comes from its latest Wealth Sentiment Survey, which also revealed that nearly 20% respondents had been unable to save any of their income in the last 3 years. Additionally, more than 25% saved less than 5% of their income.
When it comes to retirement, just 20% per were willingly use the family home to fund their golden years but 37% of Australians think they won’t have enough money to retire on at all. These results are up on the 30% of respondents who said they wouldn’t have enough to retire on in the first quarter of 2017.
The average Australian predicts they will need $1.1M in savings or investments on retirement, but thinks they will only have $700K outside of the family home. Low income earners predict they will require between $750K and $820K and high income earners think they will need $1.5M.
Most working age Australians have super, but 20% of those on less than $35,000 a year have a current fund compared to just 3% of Australians with incomes exceeding $100,000.
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