Superannuation is becoming a larger part of our asset base
The most recent Household, Income and Labour Dynamics Australia (HILDA) report included some interesting observations in regards to Superannuation that indicated it was becoming a larger part of our asset base.
The average Superannuation balances have increased substantially over the last decade or so, this occurred for those with below average balances, those in the top 10% of balances and those with balances in between.
The gap between the haves and have nots remains larger than would be desirable, and there is still a significant gap in the averages between the superannuation balances of males and females.
The increases in the minimum contribution rate, coupled with Superannuation earnings and drawdown now being tax free has seen many Australians direct much larger savings to Superannuation compared to previous generations.
With many of us being priced out of the property market, the HILDA report noted that amid falling levels of home ownership, superannuation is rapidly becoming the most important asset in a household’s wealth portfolio. The report also predicts that Super could overtake the family home as our main asset by 2029.
Despite the fact that Australians are saving more than ever into Superannuation, it is still common for many to have very little (if any) involvement in their superannuation investment strategies.
Unfortunately, Superannuation isn’t treated with same diligence as the rest of our money. Perhaps the fact we can’t access our funds leads to us not valuing the money the same as our other assets.
According to the ATO, 45% of people have more than one super account; although some of these will have more than 1 account for justifiable reasons, it is likely the vast majority have no reason for having multiple accounts.
Compulsory contributions will result in most of us accumulating significant assets in Superannuation. The sooner we start taking an active role to ensure that we end up with appropriate strategies – the better our financial future.