Whether you think it’s a necessary evil, believe it makes the world go round or wish it grew on trees — money is an essential part of life. Take our quiz to test how much you really know about your money and how it can work for you.
Fund facts – how much do you know about money?
1. TRUE. You don’t have to retire to access your super providing you’ve turned 65. You can access your super before you turn 65 if you’ve reached your fund’s preservation age and stopped working. Your preservation age depends on when you were born. Visit www.ato.gov.au/Individuals/Super/Accessing-your-super
2. FALSE. The comparison rate refers to the true interest rate you will pay after the ongoing and establishment fees are factored in. It doesn’t, however, take into account any exit fees the lender might charge.
3. FALSE. You can only nominate a dependant (a spouse or child) or your estate to receive your super’s death benefit. Your estate, however, can include someone who isn’t a dependant, such as a sibling or parent. Make sure you have a legal will and check with your legal adviser if you need to nominate or update your super beneficiaries. Visit www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/insurance-through-super/super-death-benefits
4. TRUE. The amount of insurance you take out on your home building should be based on the cost of building your home again in today’s market, not how much you still owe on your mortgage and not how much you paid for your property.
5. FALSE. Even though you will have paid off your home, you will still need about 67 per cent of your current income for a comfortable lifestyle, according to the Australian Investment and Securities Commission. Visit www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions/how-much-is-enough
6. TRUE. Lender’s mortgage insurance (LMI) is charged to the borrower when a loan exceeds 80 per cent of a property’s value. The insurance is a safety net for the lender to recoup its funds if you default on the loan.
7. TRUE. Salary sacrifice payments into super are taxed at just 15 per cent, which is why it’s a great way to boost your retirement savings. You can salary sacrifice up to $30,000 a year into your super, or up to $35,000 if you’re over 50. Visit www.ato.gov.au/Individuals/Super/Super-and-tax/Tax-on-contributions
8. FALSE. It will actually take you 31 years to pay off the debt and cost you more than $5,500 in interest. Always pay more than the minimum to help reduce your debt faster.
9. TRUE. By paying fortnightly you actually make 13 payments a year instead of 12, which helps you reduce your debt faster.
10. FALSE. The compulsory superannuation rate – what your employer must pay on your behalf – increased on 1 July 2014 to 9.5 per cent. Some employers opt to pay a higher percentage on behalf of employees. Check your super rate and choose a fund that suits your needs, not your employers. Visit www.ato.gov.au/Individuals/Super/
Tax: the information in this article does not constitute advice. As taxation legislation is complex,we recommend you speak with your financial advisor, tax advisor or contact the ATO for further details and expert advice regarding your personal circumstances.
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.