How super works and choosing a fund (2024)

FAQs

How does super fund work? ›

Your employer pays your super on top of your wages. You can also make additional voluntary contributions up to a cap. Your chosen super fund invests and manages this money for you until you retire. Your super fund will offer you a range of investment options and account types to help you choose what's best for you.

There are different types of super funds. To choose one that suits your situation and maximise your retirement savings, consider their administration fees, insurance, member benefits, as well as performance and investments options.

Compare your fund's investment performance over at least five years. Consider the impact of fees and costs. Compare like with like. For example, only compare a balanced option with another balanced option, and try to use the same time frame.

How much super do I need for $50,000 a year? The ASFA Retirement Standard suggests a single person can enjoy a 'comfortable lifestyle' on around $51,000 a year while a couple would need around $72,000 for the same standard of living.

Depending on your fund's rules, you may be able to withdraw some or all of your superannuation (super) as a lump sum. If so, you can take all your super in one go, or as several lump sum payments. Ways of using a lump sum include: clearing debt (for example, paying off your mortgage)

If you can afford it, making extra contributions is a great way to boost your retirement savings. And it can reduce your tax. If you're on a low income, you may be eligible for extra contributions from the government.

Conservative. Investment mix: around 30% in shares and property, and 70% in fixed interest and cash. Returns: Aims to reduce the risk of loss and therefore accepts a lower return over the long term. There is less chance of having a bad year than in the balanced or growth options.

To understand the differences between all of those funds, it helps to know what the different types of super funds are. Basically, there are five main types of funds: retail funds, public sector funds, corporate funds, self-managed funds and, our favourite, industry super funds.

Mine Super, Colonial First State, and Insignia share the title of best-performing growth fund in the financial year 2024, according to Chant West. Mine Super Growth, CFS FirstChoice Growth, and IOOF Balanced Investor Trust each delivered 10.7 per cent, followed by Brighter Super Balanced at 10.6 per cent.

To choose a mutual fund, define your investment objectives (e.g., retirement, education, wealth creation), choose a fund category (equity, debt, hybrid) based on your risk appetite, and evaluate historical returns, expense ratios, and fund managers.

What is the highest performing super fund? ›

You can retire at 50 with $500,000; however, it will require careful planning and budgeting. As the table above shows, if you have an annual income of either $20,000 or $30,000, you can expect your $500,000 to last for over 30 years. This means you will run out of retirement savings in your 80s.

If you withdraw a lump sum from your super, that money is not included in the age pension income test. But depending on how you spend those funds it may be included in your assets test. If you invest the lump sum in assets, like shares or investment property, they will be included in your assets test.

To cut to the chase, if you want your interest to earn $50,000, $70,000 or $100,000 per year, you'll need to have approximately $1.25 million to $2.5 million in savings or retirement accounts. If you're aiming for somewhere in the middle, like $70,000, you'd want to have $1.75 million saved.

In an accumulation fund, your money grows or 'accumulates' over time. The value of your super depends on: the money that you and your employers put in (known as super contributions), and. the investment return generated by the fund after fees and costs.

Super funds do charge fees for the services they provide, usually as a dollar amount or a percentage of your balance. These include general fees such as administration, member and investment, as well as optional extras including adviser fees and insurance premiums.

When withdrawing your superannuation, you can generally choose to receive it as a lump sum, a retirement income stream, or a mixture of both. If you choose a lump sum, the entirety of your superannuation balance is transferred to your bank account.