Your super and the insurance it provides is an important part of your family’s financial plan. Do you know what to do when there are changes to your family?
Super and your family financial plan
Super and the insurance offered is more than just a part of your financial future; it is also an essential safety net for you and your family. Here are a few common situations and some things you can do to protect your family and future.
Marriage isn’t just ‘settling down’ anymore; it is the start of a whole new adventure. You’re making a commitment to someone – for better or for worse – for the rest of your lives. When you’re doing that, it’s important to be on the same page about super. When you’re getting hitched, here’s what you should think about:
- What insurance options does your partner have? Who is set as the beneficiary? You want to ensure that your spouse is taken care of in case the worst happens.
- You and your partner may wish to change the beneficiary arrangements for your super as well.
- Consider making spousal contributions to help grow each other’s super balance for a strong financial future.
Having a child
Having a baby is an exciting, joyous and occasionally terrifying time. Protecting and providing for that child is of the utmost importance. Here are some ways that you can ensure that your finances are in a good position to provide for your expanding family:
- Build a budget that tracks all of your expenses before the baby arrives and make adjustments for both new expenses (like nappies and baby food) as well as changes to income if you or your spouse takes time off work.
- Review your insurance to ensure that you have enough coverage to provide for both your spouse and children if you were to pass away or be unable to work for an extended period of time. Likewise, review the beneficiaries to clarify how the payouts will be structured.
- You can make contributions on behalf of your spouse if they aren’t working. You may receive a tax benefit as well as continue to grow their super balance.
You can set your child to be the beneficiary of your super account and insurance, though there are rules around how the payments work depending on the child’s age.
After the kids leave the house
When your kids grow up and leave the house, you start the next chapter of your life, as an empty-nester. This is a great chance to review your finances – you may have a noticeable amount of extra money now – and you can formulate a plan to make the most of your income. Here are a few things to consider:
- When do you want to retire? What do you want to do in retirement? Could you use the extra money you used to spend on the kids to top up your retirement savings?
- Review your annual budget and find ways to use that extra money to pay down debts including your mortgage.
Dealing with death
While it isn’t a subject we enjoy discussing, it’s important to recognise that death is a part of life. It’s important to have plans for what will happen when you or someone close to you is no longer around. Here’s what you need to know to get those plans started:
- When you die, your super benefit balance and death benefit from insurance is usually paid to your dependants or legal representative. Having either a binding or non-binding nomination in place helps decide where those funds should go.
- For super, dependants can include your spouse, children or anyone who is financially dependant or in an interdependant relationship with you at the time of death.
- In general, dependants are able to receive super benefits tax-free whereas non-dependant adults or adult children may have to pay some tax on death benefits.
The end of a relationship
Finances can be a point of contention when a relationship breaks down. Whether a divorce between married couples or separation for a de facto partnership, super can become a part of any settlement. Here are some of the things to keep in mind:
- Legally, superannuation benefits can be divided or split at the end of a relationship. Separating couples may be able to come to an agreement on how super is split and issue a court approved ‘super agreement’ that outlines how the funds are to be divided.
- If the parties are unable to agree, the family court will determine how super payments will be split.
- Funds are required to provide information on a person’s superannuation benefits if a relationship breaks down – but not personal details like address or phone number.
- You should review your nominated beneficiary, particularly if your nomination is binding.
If you are going through a split, it’s advisable to speak to a legal representative to better understand your options.