Australians have a number of advantages to help grow their wealth for retirement, such as the capital gains tax discount, franking credits and negative gearing.
But there's one strategy in particular that Aussies have at their disposal: superannuation.
According to reporting by The Australian, research by the Association of Superannuation Funds of Australia (AFSA) shows that around half of Australians have never looked for advice or information about what they should do financially. Those sources of information include financial advisers, superannuation funds, friends and family, online calculators and social media.
Specifically looking at Aussies of retirement age (aged 65 and over), only 60% of people have ever looked at retirement information.
Why does this matter?
Superannuation can help Australians build wealth tax-efficiently. Structuring someone's finances correctly could mean unlocking a useful source of income without draining too much from the nest egg.
The Australian reported that AFSA CEO Mary Delahunty pointed out that "many Australians may end up worse off than they should be in their post-working lives". Delahunty then said:
I suspect that there are a lot of Australians who don't think they have enough money for advice to make a difference.
That may be an intentional choice or it might be a feeling of shame that they don't want to engage in these conversations, but we know that even if you have only get a little bit of money, you will do better with that money if someone has helped you organise it.
Creationwealth financial adviser Andrew Zbik believes barbecues are the "number one culprit" in causing people to not engage with superannuation because of what happened in the GFC over a decade ago.
Retirement mistakes that people are making
Zbik believes Aussies who have never sought retirement advice are making a number of costly errors that are hurting their prospects of wealth in retirement.
The Australian reported on some of these mistakes.
The first mistake mentioned was that retirees withdraw all of their super and put the money into low-growth taxable term deposits.
Another mistake is not taking advantage of concessional superannuation contributions that help reduce the tax burden.
Another retirement error was "withdrawing money from a home loan to invest and not realising this was non-deductible debt".
Zbik then said:
There is the misconception that property is safe to invest in, shares are safe and cash is safe, but you are going to lose your money with super. It's the confusion of an asset class with a tax structure.
Superannuation is an international tax haven in your own backyard. You don't have to go to Switzerland – there's $1.9 million you can have in super tax-free in Australia and you have full control over where you invest your money.
