Super in your 30s

If you are in your 30s, chances are life revolves around children and a mortgage. As much as we love our kids, the fact is they cost quite a lot. As for the mortgage, this is the age during which repayments are generally at their highest, relative to income.

And on top of that, one parent is often not working, or working only part time. Even if children are not a factor, career building is paramount during this decade.

Are you really expected to think about super at a time like this? Well, yes, there are a few things you need to pay attention to.

Short-term plans

As careers start to hit their strides, the 30s can be a time for earning a good income.

If children are not yet in the picture, but are part of the future plan, then it is an excellent idea to squirrel away and invest any spare cash to prepare for a drop in family income when junior arrives.

Just remember that any savings you want to access before retirement should not be invested in superannuation.

Long-term comfort

Don’t be alarmed, but by the time a 35-yearold couple today reaches retirement age in 32 years’ time, the effects of inflation could mean that they will need an income of about $164,287 a year to enjoy a ‘comfortable’ retirement.

If you are on a 30 percent or higher marginal tax rate, willing to stash some cash for the long term, and would like to reduce your tax bill, then consider making salary sacrifice – pre-tax – contributions to super.

For most people super contributions and earnings are taxed at 15 percent, so savings will grow faster in super than outside it.

Growing the nest egg

Even if you can’t make additional contributions right now there is one thing you can do to help achieve a comfortable retirement: ensure your super is invested in an appropriate portfolio. With decades to go until retirement, a portfolio with a higher proportion of shares, property and other growth assets is likely to out-perform one that is dominated by cash and fixed interest investments.

But be mindful: the higher the return, the higher the associated risk.

Another option for low-income earners to explore is the co-contribution. If you are eligible, and if you can afford to contribute up to $1000 to your super, you could receive up to $500 from the government.

Super and insurance

For any young family, financial protection is crucial. The loss of or disablement of either parent would be disastrous. In most cases both parents should be covered by life and disability insurance.

If this insurance is taken out through your superannuation fund the premiums are paid out of your accumulated super balance.

While this means that your ultimate retirement benefit will be a bit less than if you took out insurance directly, it doesn’t impact on the current family budget.

However, don’t just accept the amount of cover that many funds automatically provide. It might not be adequate for your needs.

Whether it’s super, insurance, establishing investments or building your career, there’s a lot to think about when you’re thirty-something. • The information provided in this article is general in nature only and does not constitute personal financial advice.