When you’re obsessing over home loans and property inspections, your retirement fund is probably the last thing on your mind. But ignoring it may mean missing out on potential opportunities to reach your property goals.
Buying property is an all-consuming hustle. You sacrifice your weekends to attend crowded inspections, spend evenings scrolling through the latest property listings and obsess over borrowing capacity all while scraping together every spare cent for a deposit.
Because of this, many prospective buyers suffer from a kind of financial tunnel vision.
But in the race to secure the keys to a new property, one of the potential long-term financial tools in a buyer’s arsenal is often left to gather dust: superannuation.
“A common misconception about super is that it is ‘locked away’ until retirement and not available if the money is needed now to buy a home,” AMP Financial Adviser Yvonne Wilson says.
In some circumstances, eligible individuals may be able to access certain voluntary super contributions under the First Home Super Saver (FHSS) Scheme, subject to eligibility criteria, limits, and individual suitability.
Here is why your property hunt is the ultimate wake-up call to get your finances in check, and how super can be the forgotten piece in the property puzzle.
Why do so many Australians ignore their super when property hunting?
1. They assume super can’t help them
Because of that belief that super is strictly out of bounds until your later years, it rarely gets a look-in during a property search.
But looking at it purely as a distant retirement fund means missing out on potential benefits that can help your current financial situation.
“Superannuation can help with the long-term game, as tax-effective contributions can reduce tax paid in the short term whilst contributing to long-term savings,” says Yvonne.
“There are also the added (and often forgotten) insurances in superannuation which can protect income and lifestyle during working life.”
2. They’re focused on saving for the deposit
It is natural that your immediate focus is on saving cash, given that the initial lump sum basically dictates your entire property journey.
But Yvonne says superannuation can also be valuable in this instance.
“The [First Home Super Saver] Scheme allows a person to make personal voluntary contributions up to a maximum of $15,000 in any one financial year. Then up to a maximum of $50,000 of those voluntary contributions (plus earnings/less tax) can be withdrawn from super and contribute to a deposit, subject to eligibility criteria,” Yvonne says.
Some of the benefits of this include voluntary contributions being taxed at 15%, instead of marginal tax rates, and assessable released amounts can benefit from a 30% tax offset.
3. They underestimate their mortgage
Getting a mortgage isn’t a sprint; it’s a marathon.
Many buyers get so caught up in the stress of the initial purchase that they forget to plan for how they’ll actually clear that debt down the track.
Yvonne says many people underestimate both the time needed to save for a deposit and the long-term commitment of paying down the mortgage.
“Consideration needs to be given to the size of the home, the location and how the repayments are going to be made,” she says.
This is where playing the long game with your super pays off.
“A balanced approach may be maintaining the required loan repayments while building superannuation at the same time with regular contributions,” says Yvonne.
“At retirement, the growth of superannuation can provide greater flexibility in later life, including the option to clear the remaining mortgage debt and providing long-term financial security.”
4. They think they need to make massive contributions
When you’re hit with new mortgage repayments, rates and building insurance, the idea of throwing extra money into a super account can feel impossible.
But you don’t need to inject sizeable lump sums to see a difference – you just need to be consistent.
Small, regular, superannuation contributions can impact superannuation over time and may contribute to improved long-term outcomes at retirement, and Yvonne says it’s worth considering whether this could be right for you.
“Contributing small amounts on top of the compulsory employer superannuation guarantee contributions – benefiting from compounding returns and then gradually building a pool of wealth – provides options at retirement.”
How to get your super sorted while house hunting
If you haven’t logged into your super account since you signed your first employment contract, don’t panic. Taking control is way easier than dealing with a property settlement.
Yvonne says to start with simple advice and look at how your money is invested within your superannuation fund.
“Is it invested according to your appetite for risk? Are you an aggressive or conservative investor? Are you willing to take some level of risk to potentially earn more or do you just want to protect what you have?”
Before making any changes, take some time to consider whether switching investment options is right for your circumstances and seek professional advice if you’re unsure, as changing from a default option may affect certain protections available under the law, and many super funds offer lifecycle options that evolve as you age.
Once you know where your money is actually going, you can tweak the rest of your strategy.
Yvonne also stresses that once investments have been reviewed, you should start to consider how much extra/if any can be contributed to superannuation.
Finding a fund that does the heavy lifting
When your brain is already melting from comparing home loan interest rates and offset accounts, you need a super fund that provides access to guidance and support.
While most people only look at the price tag of a fund, Yvonne points out that what you really need is expert support.
“Fees are a good starting point and usually the focus when someone compares superannuation funds, however there are many other features worth considering,” she says.
“Access to advice can outweigh the focus on fees, as fees are a constant and the difference between superannuation funds may be minimal. Good advice, especially when it is tailored to your personal circumstances, is invaluable.”
When you’re shopping around for a fund, look for features like personalised advice, investment flexibility, solid insurance options, and retirement tools.
If you are with AMP Super, that expert guiding hand is already built right into your account – there is Digital Financial Advice and over the phone advice where you can speak to a qualified financial adviser like Yvonne to obtain personal advice for your situation, for no extra fees — meaning you can get your questions answered without dipping into your house deposit savings in your bank account.
“I cannot begin to explain how often I hear ‘I wish I had known about these advice services earlier’ – so get on the front foot and invest in your superannuation today for tomorrow,” urges Yvonne.