Superannuation for the Suddenly Single: A Financial Planning Guide
Life can take unexpected turns, and finding yourself suddenly single later in life—whether due to separation or divorce—often brings emotional and financial challenges. Beyond rediscovering yourself and planning for the future, you must also focus on one critical aspect: your superannuation and retirement planning.
According to the Association of Superannuation Funds of Australia (ASFA), a single person needs approximately $595,000 in superannuation savings (in addition to owning a home) to live a comfortable retirement. If this figure feels overwhelming, don’t worry. By taking proactive steps now, you can rebuild your financial future and set yourself on the path to retirement security.
Step 1: Get Your Superannuation in Order
Before making significant changes, ensure your superannuation is organised. Key actions include:
Understand how superannuation works: Familiarise yourself with contribution types, tax advantages, and withdrawal rules.
Consolidate your superannuation accounts: If you have multiple accounts, combining them can reduce fees and simplify management.
Review your super fund: Check that fees are reasonable and that your investment options align with your goals and risk tolerance.
By addressing these basics, you’ll have a clear starting point for improving your financial plan.
Step 2: Boost Your Superannuation Contributions
Adding extra to your superannuation can significantly enhance your retirement savings. Consider:
Salary sacrificing: Contributing pre-tax income to your superannuation can reduce your taxable income while growing your retirement savings. Contributions are taxed at just 15%, which is often lower than your marginal tax rate.
Regular contributions: Even small, regular contributions can grow significantly over time due to the power of compound interest.
Starting early is key to maximising your financial potential.
Step 3: Revisit Your Career Path
A career evaluation can be an essential part of your financial planning. If your career has taken a backseat, now might be the time to refocus on professional growth. Advancing your career can increase your income, employer superannuation contributions, and your ability to make additional contributions to super.
Consider upskilling or exploring new opportunities to enhance your long-term earning potential.
Step 4: Invest Your Superannuation for Growth
Your superannuation investment strategy plays a crucial role in your financial future. Different investments have varying risk levels and potential returns:
Conservative investments: Include cash, term deposits, and defensive assets, offering lower risk but modest returns.
Growth investments: Such as shares and property, involve higher risk but often deliver greater long-term growth.
If retirement is still years away, consider a more growth-oriented investment strategy to maximise your superannuation returns over time. With a longer timeframe, you can ride out market fluctuations and achieve higher potential gains.
Step 5: Protect Your Financial Future
As a newly single individual, protecting your financial wellbeing is critical. Risk protection should include:
Life Insurance: Provides for loved ones in the event of your passing.
Total and Permanent Disability (TPD) Insurance: Covers costs if you’re unable to work due to disability.
Trauma Insurance: Offers financial support for critical illnesses.
Income Protection Insurance: Ensures ongoing income if you cannot work due to injury or illness.
Review your existing policies and adjust coverage to suit your new circumstances.
Start Your Financial Planning Journey Today
Navigating life after separation or divorce can feel overwhelming, especially when it comes to managing superannuation and planning for the future. With tailored financial advice, you can assess your current situation, set realistic goals, and create a strategy to secure your financial wellbeing.
At AGS Financial Group, we specialise in financial planning and superannuation advice tailored to your unique needs. Contact us today to begin building a brighter financial future.