So you’ve switched to a KeepCup, you haven’t used a plastic bag in years, and your compost bin is currently feeding half your neighbourhood’s veggie gardens. You’re doing everything you can, and just like all of us, you’re doing your best. But what if we told you that there was one more thing you could do that would take as little as five minutes and you’re set for life?
Right now, there’s a good chance that all your hard earned super is being invested in direct opposition to your values. 55% of the world’s super funds are currently invested in fossil fuels! And if you don’t know where your super is, yours could be too! But you can change that by switching to a super fund that turns your money into a force for good, helping both you and the planet.
You might feel like your super is out of your control, or something you don’t need to worry about until you retire. But the truth is, we can be and should be in control of it, for the future of both the planet and ourselves. Did you know that on average women end up with 42% less super than men? Even though we tend to live longer! So women need to take extra care to be on top of where our super is invested to ensure we have enough to support ourselves in retirement.
So, where should you start? We asked our own superfund, Australian Ethical, gurus on (you guessed it) all things ethical super, a few questions about the basics of super and how to invest it in a future that really is sustainable for all of us. We spoke with Allyson Lowbridge the Chief Customer Officer at Australian Ethical.
(The good news is, it only takes a few minutes to sign up and invest your money in good things!)
Why do women have to pay particular attention to our super?
Women live on average five years longer than men. Yet in Australia in 2017, men retired with significantly higher super balances compared with women. The average Australian male accumulates about $270,000 at the age of 64, while the average Australian female has around $157,000. There are a number of reasons for this super gap between genders, which Australian Ethical examined in our recent article Rectifying the gender imbalance.
Take a look at this break-down [ASFA website page 9] showing the average super savings men and women have by age. How does your super compare?
How does my super impact climate change and the environment?
Super funds invest your super savings in businesses with the long-term aim of making your money grow. But many funds choose to invest in really unsustainable industries. Without knowing it, your super could be used to invest in coal, tobacco or nuclear weapons.
On the other hand, your super could be used as a force for good – like investing in renewable energy, or businesses and initiatives like Trilogy which makes skincare and employs and fairly pays local women in Lesotho in Africa, or Interface which collects discarded fishing nets from fisherman and turns them into carpet so the nets don’t end up damaging our oceans. Super, if invested well, has the power to do a lot of good.
With so much of the world’s super contributing to global warming and climate change, Australian Ethical offers a transparent and trustworthy alternative. For over 30 years we have been investing ethically, making sure your super is doing ‘good’ while you save for retirement. Our returns are good too.
We know that the future of the planet needs solutions now, and we’re committed to making those changes. We’re committed to a zero-emissions future and don’t invest in coal, oil or gas companies. Instead, we invest in wind turbines and solar panels, we help advance electric cars, better recycling centres, amazing public transport systems and healthcare. We even give 10% of our after-tax profits to charities and social impact initiatives to improve the lives of people, animals and the environment.
We offer an alternative for people who want to divest their money (or take their money out of a fund investing in industries they don’t agree with) and invest it in planet-positive industries. And as more people join us and put their money into ‘positive’ investments, we can send a message to companies that more consumers than ever are fed up with their dirty environmental games.
Climate change is a bigger problem than any one person can solve. But if we all work together and use the language that speaks to most people (that is, money), we will make change.
So what are the basics when it comes to super?
Superannuation is all about putting money aside for your retirement during your working life. Without super you might need to rely on the aged pension – but there’s no guarantee that the pension will still be in place when you’re ready to retire. So super is a great way to plan for a comfortable retirement by investing in a way that brings the best long-term benefits and build your retirement nest-egg until you’re ready to use it.
For most people, your employer automatically puts this money aside for you, so it’s not something you have to think about very often. These payments are in addition to your take-home pay –usually employer super contributions are at least 9.5% on top of your regular earnings.
The great thing about investing ethically is that, in addition to helping you live well in the future, your super savings can be invested in a strong sustainable fund that can start working right now to help save the planet.
How do I choose a super fund?
For most people, the choice is yours (for example you don’t have to use the fund your employer wants you use, which is called their default fund). So that means you can choose to go with an ethical fund.
When you start a new job, you’ve got 28 days to select your super fund, or you automatically opt-in to the employer’s default fund.
What if I have multiple super accounts?
If you have multiple super accounts, you’re paying multiple fees. It might not seem like a lot now, but those costs will add up over the course of a lifetime. (Imagine all those trips you could take in retirement if you just combined those super funds now!)
In Australia, there is $14 billion in lost super waiting to be claimed. That’s a lot of money that could be doing a lot of good, so it’s important that you know where your super is and consolidate it. Don’t let yours be one of the lost ones!
It’s easy to find and combine your entire super savings. You can use the myGov website, or sign up to Australian Ethical and we can find and combine your super for you.
Remember that when you move house, change jobs or change your name, you are responsible for keeping track of your own super. If your super has your tax file number, it’s a lot easier to keep track. You can create a myGov account and link it to the ATO to make things easier for you too.
How much money do I need to retire?
The Association of Superannuation Funds of Australia (ASFA) estimates that singles who are 65 years old need about $44,000 a year for retirement – but that doesn’t take into account inflation or big purchases such as a caravan or a boat if you really want to embrace the lifestyle of a ‘grey nomad’.
Australian Ethical has a great tool to help you get an idea of the impact putting a little bit of money in your super now can make. Take a look at the Retirement Calculator here to see if you’re on track to have enough for retirement.
So what’s the best way to make my super grow?
It’s pretty easy. You can add extra money into your super savings, which over time allows that money to grow on ‘compound returns’. That can have an amazing effect on your long-term super savings. You might even get some tax bonuses for adding pre-tax money to your super.
You could even consider what’s called a salary sacrifice. That’s when you organise for your employer to regularly put more of your pre-tax salary into your super account than normally goes in (within the set limits).
If you’re thinking about topping up your super with what you consider a lot of your hard-earned dough, it’s best to get advice from a financial adviser first to make sure you’re maximising your potential benefits.
Where can I get more info?
There’s no time like the present to divest your money from polluting industries and invest for a better future!
For the super-keen among you, take a look out these links for more information:
- Join Australian Ethical today.
- Review the Responsible Investment Association of Australasia (RIAA) website, which certifies responsible super funds, and shows whether your current super fund is as sustainable as they say they are. RIAA also lists suggestions of ethical financial advisers around Australasia so you can find one that suits you.
- The MoneySmart website has a wealth of more general financial information at your fingertips, including a list of complex financial terms explained clearly.
- For super-specific advice, visit SuperGuru.
- For even more tips and tools to boost your super savings, Australian Ethical’s article, ‘Taking control of your super’ is helpful.
- Sign up to a 12-week Money Makeover with 10 Thousand Girl’s online money management course.
Disclaimer: The information in this article is general information only and does not take into account your individual investment objectives, financial situation or needs. Before acting on it, consider seeking independent financial advice from an appropriately licensed advisor. Australian Ethical’s financial services guide (FSG), managed funds product disclosure statements (PDS) and super product disclosure statement (PDS), available at australianethical.com.au should be considered before making an investment decision.
The online retirement income simulator noted above was prepared by Mercer Consulting (Australia) Pty Ltd (MCAPL) ABN 55 153 168 140 for Australian Ethical Superannuation Pty Limited. The simulator is not intended as an advertisement for any product issued by Australian Ethical Superannuation Pty Limited, Australian Ethical Investment Limited, Mercer, MCAPL, or any of its related entities.