Superannuation is made up of:
- the accumulated contributions made into the fund over a person’s working life, and probably
- the value of life insurance in the event of premature death
The question you need to ask yourself is:
- How can I make sure that my superannuation balance will be enough for me to live on for the rest of my life?
- How do I work out how much insurance I need?
These questions are of vital importance to everyone. Very few people consider them and solve them satisfactorily.
If you are an employee, your superannuation contributions and therefore the ultimate accumulated balance is determined by how much you have earned over your lifetime. This does not reflect what you need for your retirement. Furthermore, in Australia the conversion of the accumulated superannuation lump sum into an income stream is not mandatory.
When it comes to the life insurance component, most people have no idea how much insurance is necessary to support their dependents. As the superannuation industry generally provides everyone with a nominal amount of cover without any careful and original thought to determine an appropriate level of insurance many are left with the false comfort that their insurance needs have been properly considered.
forethawte.com.au aims to offer some ideas for you to consider the superannuation lump sum required and a life insurance amount appropriate for you.
In planning your financial future the risks that you have, particularly with the potential for long-life, is that you superannuation balance will not support your desired income for your remaining life.
Secure income streams that guarantee the fulfillment of the planner’s desire for the provision of living expenses and ongoing support for the family are also not without risk.