More pension relief for retirees, $2 million retirement, horror returns, 20 years of SG, comparing funds, how much is enough and more
Welcome to the AUGUST 2011 edition of SuperGuide newsletter, a free and independent source of superannuation information for consumers. The highlights of the AUGUST 2011 SuperGuide newsletter are:
- THE SOAPBOX: GOVERNMENT MUST GRANT GREATER RELIEF ON MINIMUM PENSION PAYMENTS. Offering 25% temporary relief is better than nothing, but for many retirees the 25% relief won’t be enough with further falling markets. By reinstating the pension relief to 50% of the usual minimum payment, the Government can help retirees survive the current market madness. Click on article link below to find out more.
- SUPER FUNDS LOSE 5.5% IN VALUE IN 7 WEEKS. Oh dear! The international and Australian sharemarkets are jumping around like a pogo stick, and returns are fairly dismal for the start of the new financial year. Super funds lost 1.5% for the month of July, and then August came along. Click on the link below for more.
- 20 YEARS OF SG DELIVERS 7% A YEAR. Now for the good news! Although the markets are all over the shop at the moment, the typical Australian super account has received, on average, a return of 7.1% since the introduction of compulsory super (SG). Don’t believe me? Check out the article link below.
- CRUNCHING THE NUMBERS ON A $1M OR $2M RETIREMENT. Curious? You’re not alone. Due to popular demand, we have created a 2-part special on what a $1 million lump sum can deliver you in retirement, and what a $2 million lump sum can give you as a single person, or a couple, and whether you retire at 55, or at 61 or 65. Click on the article links below.
- BAN UNHEDGED INTERNATIONAL SHARES IN DEFAULT INVESTMENT OPTIONS. Complacency by super fund trustees is costing Australian super fund members billions of dollars. Hedged international share investments outperformed unhedged international shares over 1, 5 and 10 years. Why would super funds continue to unhedge international shares if such an approach continues to lose money for fund members? I have written about this issue before but the industry is still not listening. Click on the link below to find out more.
- INVESTMENT PERFORMANCE: WE’RE THE BEST SUPER FUND. NO WE’RE THE BEST… For the answer, and other interesting performance information, click on the article link below.
- A COMFORTABLE RETIREMENT: HOW MUCH SUPER IS ENOUGH? We have updated two of our most popular articles with the latest cost of living data, and surprise surprise, living costs in retirement have increased. Even so, with a little bit of planning, the lump sums necessary to deliver a comfortable retirement are achievable for many Australians. And if you want a lifestyle that is more than comfortable, then we give you the target lump sums needed for a cushy lifestyle as well. Click on the article links below.
In this month’s newsletter, we also give you some helpful articles as a starting point for comparing your super fund: such as the 8 steps you need to consider, how to find out what investment option your super money is invested in, and then how to compare your super fund’s investment performance against other super funds. We have many more articles on comparing funds on the SuperGuide website. We will be providing more resources in the future to help readers process the current economic events and what these events mean for super fund accounts.
For those readers who have sent emails to the SuperGuide team, we have a backlog in the time taken to acknowledge emails. Although we acknowledge all emails, due to the number of emails that we receive, we cannot promise to respond to all questions.
Note: You can click on the links below or you can access the newsletter link directly via the SuperGuide website. Click here if you want to access the AUGUST 2011 newsletter page via the website.
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Thanks again for your support and interest in SuperGuide.
Trish Power
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THE SOAPBOX
THE SOAPBOX: Government must grant greater relief on minimum pension payments
The federal government must reduce the minimum pension payment required to be withdrawn from super pension accounts to at least half of the usual rate. By reinstating the pension relief to 50% of the usual minimum payment, the Government can help retirees to meet minimum pension payment requirements, who may otherwise be forced to sell shares in a continuing depressed market. Read more
FEATURES
Super funds lose 5.5% of value in 7 weeks
The median superannuation growth fund lost 1.5% of value for the month of July, and has suffered a massive loss of 5.5% for the financial year to date (July 2011 through to 19 August 2011), according to rating company Chant West. Read more
20 years of SG delivers 7% a year
Since Superannuation Guarantee was introduced 20 years ago, the long-term return generated on the typical ‘balanced’ super fund account has been 7.1% a year, according to rating company, SuperRatings. Read more
Crunching the numbers: $1 million retirement
I am often asked the question ‘how much super is enough for a worry-free retirement?’, and we regularly update our special SuperGuide articles on this topic for our readers. In this article I’m answering the question: what does a $1 million retirement look like? This article forms part of a two-part feature ($1 million and $2 million retirements) for those readers who want a truly comfortable life in retirement. Read more
Crunching the numbers: $2 million retirement
I am often asked the question ‘how much super is enough for a worry-free retirement?’, and we regularly update our special SuperGuide articles on this topic for our readers. In this article however, I’m tackling the issue from a very different perspective. I’m answering the following question: what does a $2 million retirement look like? Read more
Ban unhedged international shares in default investment options
A failure by large super funds to fully hedge against the Australian dollar on international share investments is what I consider to be a major investment boo-boo. Hedging is used to fully or partially eliminate the impact of foreign currency movements (especially the Australian dollar) on the value of investments. For the record, the Australian dollar is one of the most frequently traded currencies, and consequently one of the most volatile foreign currencies. Read more
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TIME TO REVIEW YOUR SUPER FUND?
Investment performance: We’re the best super fund. No we’re the best…
A popular question from SuperGuide readers is: what is the best-performing super fund in Australia? Using the term ‘best’ is dangerous in any field because it involves some level of personal judgement, and the answer can change frequently depending on what you’re measuring, and when you’re making the assessment, especially when we’re considering the current volatile markets. Usually, there are a bunch of top-performing super funds over time rather than one particular super fund. Read more
Fund choice: Comparing your super fund in 8 steps
A common and reasonable question is, what does a good super fund look like? Professional rating companies, such as SelectingSuper, SuperRatings and Chant West, evaluate and rate Australia’s largest super funds against criteria such as; investment performance; number of investment; options; fees; insurance; extra services, such as financial planning services and cheaper home loans. Read more
Super for beginners, part 11: Is my super fund good enough?
Q: I have my super with a major financial organisation. I’m wondering, are they a good company to be dealing with? I feel that their fees are a bit high: based on an investment amount of $300,000 the MER amount is $6,600 plus a monthly admin fee of $8.44. What are your thoughts on this matter? Read more
Super for beginners, part 20: Comparing your super fund’s performance
Every month or two (or more recently, every week it seems) the media reports the latest returns from Australia’s largest super funds. You may look at your member statement (which provides a summary of your benefits) from your own fund and wonder why the returns being paid into your account don’t reflect the returns announced in the papers — your account may earn a higher return, or a lower return. Read more
HOW MUCH SUPER IS ENOUGH?
A comfortable retirement: How much super is enough?
So, the big question is: how much money do you really need for your retirement? Lifestyle is a very personal thing —luxury living for one person is a modest existence for someone else. I don’t intend to suggest the exact lifestyle you must choose for your retirement years but I can offer you some guidance on the amount of money you need if you want to cover your basic living costs and support a hobby or active social life. For example, do you expect to take frequent holidays and are you planning to enjoy regular glasses of wine or beer? Read more
Setting a retirement target: Living on more than $55,000
The most popular question about superannuation and retirement planning is, without doubt: How much money is enough? A glib response to this question may be: Enough money for what? From the many times, though, that I’ve been asked this question, I know that when most Australians ask it, they really want to discover the answer to: How much money do I need to maintain (or improve) the lifestyle I currently have until the day I die? For some Australians, the question also includes: ‘And to leave enough money to help my family after I’ve gone’. Read more
