Compare and find the best superannuation savings account
Superannuation savings accounts let you tuck money away from your first day on the job to the day you hang up the tools for good. They also allow you to save for your golden years without the market volatility that comes with super funds.
These accounts haven’t vanished completely and are still offered by a select few financial institutions. With Savvy’s easy-to-use comparison information, you can find out more about the best options for your retirement savings.
How does a superannuation savings account work?
Superannuation savings accounts are essentially a hybrid of a super fund and a savings account. You can use this low-cost account to amass a nest egg while you’re working. From there, you can tap into the money the day you retire. The key benefit of these accounts is that your balance isn’t determined by movements in the market (beyond any changes in interest). As such, your balance can only go up.
These accounts were standard in the years before the Superannuation Guarantee came into effect in Australia in 1992. This guarantee meant 72% of the country’s workforce were able to open specialised super funds. Prior to this, government records show only about 32% of workers were covered by superannuation. Only a handful of credit unions, banks and building societies offer these accounts today because of their low rate of return. They’re also often only available to existing customers or require minimum balances of $10,000.
Both accounts only allow you to withdraw money when you’ve retired or reached preservation age. Employer and personal contributions are accepted on both accounts, with spouses also able to deposit. You can use Savvy’s online calculator to work out how much you need to regularly deposit to reach your retirement savings target.
Superannuation savings accounts typically come fee-free. This means you get to avoid monthly account fees and paper statement charges which could cost you up to $7 or $8 a month in total. This may not seem like a lot, but they could eat into your savings when added up over time. However, this depends on who you bank with, as it’s not unheard of for institutions to charge a $35 annual admin fee. By comparison, a super fund can come with fees for management, advice and administration. These are capped at 3% p.a. of your balance.
Should I have a regular super fund instead of a super savings account?
Both of these types of accounts have benefits, but ultimately your decision will come down to whether you value performance over protection or vice versa, as well as how involved you are in the investment of your funds.
A super fund can earn you up to 20% p.a. on your money, which is much higher than the interest offered on a savings account. Most savings account interest rates are relative to the rate of inflation so, in reality, your money may not be growing as much as you think. The added bonus of a super fund is that you’ll be taking advantage of long-term compounding interest. You can use Savvy’s savings calculator to simulate how your nest egg could grow with compound interest.
Super funds are subject to the rollercoaster ride of the share market. Professional investors pool your money with that of other members and reinvest it in a range of industries. Therefore, if the market is rising, your balance rises with it. Likewise, if the market suffers a downturn, your super balance will drop. However, downturns in the market are rarely permanent.
Savings accounts are low-risk investments which aren’t dictated by these forces. What you deposit stays in your account until you reach retirement age. Also, the government-backed Financial Claims Scheme provides a guarantee on balances up to $250,000 in the event your bank, credit union or building society crashes.
Super funds let you have as much or as little involvement in how your funds are invested. You have two different options: a self-managed super fund (SMSF) or a professionally managed super fund. A SMSF gives you more involvement over investments at an increased level of risk, whereas a standard super fund comes with less involvement and less risk because your choices are controlled by experts. On the other hand, a superannuation savings account allows you to have full control with minimal risk.
Top tips for comparing super savings accounts
A high rate on your savings account will allow you to achieve your goals faster than a low one. Comparing accounts side by side allows you to find and secure the best rate to fast-track your savings target. Additionally, you can use our savings calculator to assess how long it will take to reach your goal using different variables.
Opening a savings account is like buying a car: you have to do your homework before you settle on the one you like. That’s where Savvy comes in. We provide you with clear comparison information so you can compare and find the best retirement savings account on the market.
Opting for a high interest, low-fee account will avoid the interest you’re earning from being eaten away by unnecessary charges and costs. Balance these out and make sure your savings growth isn’t counterproductive.
While you won’t be able to touch your funds until you’re ready to farewell your working life, comparing will ensure you find an institution which allows you to easily track your balance and monitor progress via internet banking or a mobile app.