Did you know the average superannuation balance for Australian retirees is around $292,500 for men and $138,150 for women? However, the Association of Superannuation Funds of Australia estimates that you need $545,000 to retire comfortably as a single person and $640,000 as a couple. If you want the freedom to enjoy the retirement you’ve always dreamed of, complete with overseas travel and meals out at your favourite restaurant, it is never too early to look at how to optimise your superannuation.

Talk to an Expert

With many people taking control of their future by way of Self-Managed Super Funds (SMSF), a good SMSF accountant can work with you to create an investment strategy and portfolio that will be tax‐effective while also achieving your other financial goals. Rules and regulations govern the SMSFs and dictate how much money you need to set up a fund, the laws surrounding how and when you can withdraw money and the recordkeeping required.

You have worked hard for this money, so ensuring you set up your fund appropriately is critical. If your fund is deemed non-compliant, you will be taxed at the highest marginal tax rate and could lose up to half of your hard earned super in tax. An SMSF accountant can safeguard you against this.

Determine the Right Level of Liquidity

Your portfolio will vary dramatically depending on how close you are to retirement. A long-term strategy allows you to ride out the peaks and troughs of the property market or share market with a mitigated level of risk. If you are looking to retire soon, then you need to consider a more liquid strategy that will allow you to withdraw funds when required, without worrying about whether the market is in a downturn.

Don’t Put All of Your Eggs in One Basket

People often stick with what they know. If they have made money from the property market in the past, it is tempting to continue to invest in this way. But what happens if the property market crashes? Bye-bye retirement nest egg! You should always ensure that you maintain a diversified portfolio, thus protecting yourself from over-reliance on any one sector. Diversification may mean that you invest in overseas and local companies, take up shares in a variety of industries, all while keeping an investment property or two tucked up your sleeve.

Know Your Risk Tolerance

When you first set up your superannuation fund, you most likely had to select your level of risk tolerance. The options offered are usually conservative, balanced, growth and aggressive. Generally speaking, the greater the risk, the greater the possible returns when it comes to investments. Of course, conversely, this means the greater the possible losses as well. When you are trying to determine your risk tolerance, you must consider your knowledge, experience and confidence in the market sector in which you are investing. Your answer may change over time as you draw closer to retirement age and are less inclined to take chances.

Review and Revise

Superannuation investment strategies – particularly self-managed super funds – are not designed to “set and forget.” You should regularly review your investment portfolio to be sure that it is set up appropriately for your stage of life, the current market conditions and your overall goals.

Time spent getting your superannuation on the right track now will pay off handsomely in the long run.