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Why The Best Time To Start Putting Money Into Your Super Is Right Now
Despite total superannuation assets hitting $3.3 trillion – yes, with a ‘T’ – at the end of the September 2022 quarter, many Aussies are neglecting their super. That trillion-dollar figure is a 3.2% annual decrease on the year prior.
With the cost of living only getting more expensive and the RBA heaping further pain onto us every month, it makes sense that many of us are trying to save as much money as possible.
🥚But that shouldn’t come at the cost of your retirement nest egg.
Here’s why it’s never too late to put more money into your super
More than 1 in 4 Aussies say they don’t have a super fund – which could put them in financial jeopardy when they decide to retire.
Couples planning to retire at 67 will need at least $640,000 for a comfortable retirement, while also being in good health and owning their home outright.
More than 1.1 million Australians are members of a self-managed super fund, with a whopping $822 billioncontained within them.
Smart strategies today like salary sacrifice can help you beef up your super savings and support a more enjoyable retirement.
Retirement age is getting later (and later), so any funds you have put aside will help you when you decide to stop working.
What type of future are you planning for?
Did you know that almost one in four Australians say they don’t have a superannuation fund?
That’s around 4.6 million people who may not have any plan – or more concerningly any savings – for their retirement. Even if you do consider yourself fairly in control of your super, will you have enough to retire comfortably?
🏖️ Annual cost of a comfortable lifestyle: $68,014 for couples; $48,266 for singles.
🏦 Annual cost of a modest lifestyle: $44,034 for couples; $30,582 for singles.
🧑 Savings required at age 67 for singles: $545,000.
👩🏿❤️👩🏿 Savings required at age 67 for couples: $640,000.
Take control of your super: While it’s not for everyone, many Aussies are turning to self-managed super funds to grow their wealth. You get total control over your investment decisions, some tasty borrowing and tax breaks, and can even invest in your dream property to retire in.
Audit your retirement dreams
It’s hard to put a price tag on retirement.
Especially if you are young, the amount of money you’d need to retire today is completely different from what you’d need in three or four decades.
✍🏽 Still, it can be very helpful to start writing down what you want your retirement to look like and work backwards from there. Here are some questions to get the process started:
At what age do I want to retire? Remember that various factors can contribute to this, such as your health, your employment status, when your partner wants to retire and the age at which you can access your super – in addition to your financial circumstances.
What do I want to be able to do in retirement? Do you have dreams of travelling the world in style throughout your golden years? Are you keen to relocate somewhere warmer in older age? Do you want to have enough money to support your children and grandchildren?
How financially comfortable do I want to be? While the figures mentioned above are calculated by the peak body for Australia’s superannuation industry, they are based on the assumption that you will own your home outright and be relatively healthy. In many cases, it will cost much more to live comfortably in retirement.
Where will my money come from? Will access to super be your only financial channel? You may want to consider the value in other things like investments, savings, business ownership, as well as whether you will be eligible for government benefits like the Age Pension.
Why every cent counts
You’d be forgiven for putting super contributions on the backburner this year, especially if money has been tight and the cost of living is getting you down.
But thanks to the power of compound interest, every little bit you add to your super today could return an incredible amount in 10, 20 or 50 years from now.
With most of your super being taxed at 15%, it makes good financial sense to contribute some of your pre-tax earnings into your super account – this is called salary sacrifice.
Depending on your super fund and the market conditions for the year, some super funds outperform all other traditional investment types – like the remarkable 18% returns achieved in 2020–21.
Use a superannuation calculator to figure out the specifics for your individual situation – including how much you can earn in interest by starting today.
The bottom line
Don’t let your super slide.
It’s easy to get caught up in the financial problems of today, but your super is about tomorrow.
💰So treat it like the investment channel that it is and start topping it up in order to enjoy a more comfortable retirement.
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