Retirement account creeping back up

At the end of last financial year (June 2007), my retirement balance was $29,662. I was pretty pleased with that. I hadn’t paid attention to superannuation in years, and back when I was in my late teens – and my balance was only around 2K – it seemed like fees often were higher than any growth my accounts attained. Perhaps last year wasn’t the time to start watching them.

After 4-5 years of apparent fantastic growth, it seems like my retirement account might end in negative territory this year. Thanks to share market volatility, my account was down in 25K territory at one point. This is pretty much hitting everyone at the moment. Currently my balance sits at $27,992. So it seems if I do match last year’s position, it will be thanks only to the government’s co-contribution scheme. Because I have made an after-tax contribution of $1000 and I am a low income earner, the Federal Government will give me $1500 to boost my fund. This is a great system for people who will never earn big bucks, because if you can manage to find the 1K, you get a 150% return on investment. And then you have $2500 more than you would otherwise have had, and then that keeps growing. If you do this every year for 10 years, the difference could be phenomenal! I guess the only issue is finding the initial $1000. I think it probably works best for people who have higher-earning partners. But it can really help, for example if a woman works part-time for 5-10 years while she raises her kids, her final retirement balance can be massively improved.

Because there is a no-choice retirement saving system in place here in Oz, it doesn’t seem painful to save for retirement. But that doesn’t mean we will necessarily have enough. I am looking forward to putting in some extra contributions when I start earning next year. Anyway, I’m not at all worried about the balance. My access to super is preserved till age 60, so this is but a blip on the account’s overall performance. I just find it fascinating to see how these things fluctuate.

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