Conflicting advice mires superannuation guidance

Earlier this year we saw claims by Jeremy Cooper, the man behind the 2010 Super System Review, suggesting that $1 million in superannuation savings may not be enough to fund a decent retirement.

More recently, the Australian Institute of Superannuation Trustees (AIST) has released research debunking this view, saying our super savings are just one source of cash in retirement.

Faced with two very different viewpoints it's easy to become confused and put super in the 'too hard' basket.

The main point to bear in mind is that the more you have in super, the more cash you have to play with in retirement. Exactly how much you need is a very individual issue, and it all comes down to the sort of retirement lifestyle you're hoping to lead.

For the record, the AIST estimates only about five in every 1,000 super fund members have $1 million or more tucked away in super savings. So plenty of us will get through retirement on far less.

Nonetheless, it is worth aiming to grow your super nest egg. For a starters, superannuation is a very tax-friendly investment and that means more money for you (and less to the tax man) when you hang up your work boots. And given our ageing population, the availability of the age pension as it currently stands cannot be regarded as a sure thing in the future.

Interestingly, the latest ING DIRECT/Financial Services Council Annual Super Sentiment Index shows that fewer than four out of ten workers make voluntary contributions to their super. Yet 20 per cent of those surveyed said there was nothing holding them back from tipping a bit of extra cash into their fund.

Making voluntary contributions to super can be surprisingly straightforward. Talk to your employer about salary sacrificing some of your salary - this is when you and the boss agree to pay part of your pre-tax salary into super instead of receiving the money as cash in hand. Or contact your super fund to set up a regular voluntary payment. 

Speaking with a financial adviser can provide the reassurance of taking a more structured approach to growing your nest egg. A good adviser can pinpoint how much super you're likely to need to achieve your retirement goals - and develop a plan of action to help you reach this target.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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