One of the advantages to hiring a financial advisor is that they can take a complete look at your finances and find out if you are “leaking” anywhere. If you are in a city like Perth, with a high cost of living, your margin for financial error is smaller and you may benefit greatly from getting sound financial advice.
While the superannuation contribution freeze is taking up a lot of news space, news.com.au recently published a report in which it said that Australians currently pay an average of $1300 in superannuation fees per year, for a national total of $20 billion.
This works out to 1.2% per year of total balancers. According to a report by the Grattan Institute called “Super Sting,” the average 50 year-old in a high-cost fund will lose $80,000 to superannuation fees by retirement day when compared to a lower cost fund. The same report said a thirty year old will lose $250,000 by the time they retire compared to a lower cost fund.
The Australian Superannuation Funds Association currently estimates that singles who retire at 65 and die at 85 will need to retire with a balance of $544,000 to provide $57,195 per year to live on. They recommend that couples have a balance of $744,000, providing $41,830 each.
Why are the Fees So High?
The fees go mainly to superannuation fund managers. Critics of the current system feel that the fees are exorbitant and are far more than it costs to manage the funds. However, approximately two out of three Australian workers don’t pay any attention to their superannuation costs, choosing the default superfund option at their workplace.
What Does it Mean to You?
It is possible to pay lower fees by having a financial advisor check to see if you are paying too much. If you are, a financial advisor can recommend a lower-cost fund.
Call 08 6462 0888 to learn more.