Anyone know about Superannuation ?

[ausaus24]

I had this plan to retire at age 55 by making small savings contributions and super from a government job (15.4% income) with an additional 5% salary sacrifice. Starting salary of around 50k plus super... seemed like a good idea or a good goal to work towards. After 30 years I would have a small fortune ready for me. I know its jumping the gun but if you've got to do something, it might as well let you retire early. I'm 25 right now.

I have found out that I won't be able to draw on super until age 60 or 65. Which makes my whole plan pointless. Does anyone know how it actually all works ?

But if you put all that effort into your superannuation and make contributions over 30 years why shouldn't you be able to enjoy a relatively early retirement ?
I might not even live to be 65.. This kind of ruins things for me. I had this vision of being able to retire at around my Dads age (he is 53). Partial retirement anyway. I'd go onto teach part time and spend my super. I thought it was a good plan....

 

[Gotadimple]

Ausaus,
I assume you're speaking of Australia's retirement plan?

The short answer is you can't because they make the rules. It's the same here in the US, the earliest one can draw the government retirement is 62. That's why many set up separate investment programs (along with what is provided by an employer, if any).

Now if you want to take those extra contributions you were planning on making and put them into a stable growth fund, in 25 years you will likely have a small fortune waiting for you -- from two sources instead of one.

No worries, mate, you have time on your side.

-- Rita

 

[DangerMouse]

Ausaus

Instead of coming onto a US forum and asking questions regarding superannuation, the best starting point for you would likely to be Australian publications or alternatively doing a net search. I don't mean to be harsh but how could you not be aware of the withdrawal age for superannuation - we don't even live in Australia and have very little money invested in super, yet with the minimum of effort we are able to stay abreast of changes. If you are only 25, I doubt if there have been any significant changes in the years you have been eligible.

The reason why the government won't give you access to the funds is because the majority would quit work and take the money at 50 and by age 65 they would be back on the government's payroll as they would likely have blown it all. Remember the majority of the contributions are not made by the employee, but rather by the employer to fund the employee's retirement to prevent the employee having to rely upon the state.

As to relying on super entirely for your retirement, surely you have heard the phrase about not putting all your eggs in one basket. You need to diversify, eg. real estate, manage funds which you can DCA on a monthly basis, open a trading account with CommSec.

However, before you do anything I would suggest you read some of the simpler financial books that are intended for the Australian market to get a handle on your options. 20 years ago I started with something by Noel Whittaker - can't remember what it was called. Also David Koch and Paul Clitheroe have given some good simple advice over the year. Lastly subscribe to Money magazine and Smart Investor (Australian versions not the US magazines with the same name) and if you read those from cover to cover every month it should be good training.

Also if you are a public servant I would imagine that your employer would host information sessions on super. At the very least you should contact your super fund to find out when they will be holding their information sessions which are free and get yourself off to one of these.

We decided years ago that it would be unlikely that we would be retiring at 65, we expected we would be done by 50 and to accommodate our desire to do so, we have invested a large portion of our holdings outside of super which means we have paid more taxes over the years, however it gives us the freedom to draw what we want when we want.

Also I would be cautious about putting all your eggs into the super basket as I should imagine some years down the track there will be further changes to the program. I think, and this is speculation on my behalf, that at some time they will require a percentage of all super to be used to buy an annuity to prevent people blowing thru all their money and ending up on government support.