Part 2/7:
Australia operates on a defined contribution system when it comes to retirement income. Unlike a defined benefit system, where retirees receive a predetermined income for life, a defined contribution model means that the income available to you in retirement depends on how much you've contributed over your working life and the performance of your investments within your super fund.
Superannuation consists of two main phases:
- Accumulation Phase: This is when you are actively contributing to your super. Your contributions are often mandated by the Superannuation Guarantee, ensuring you save for retirement over time.