With Australians now looking forward to 20 years or more in retirement, your super alone may not be enough to fund a comfortable retirement lifestyle. Here are some tips to help you build a bigger nest egg sooner — so you can retire when you want to, not just when you can afford to.
Retirement is a time to sit back, relax and focus on the people and activities that are most important to you. With the average Australian man set to live to 79 and the average Australian woman typically expected to live until 84 , it’s likely you can expect many years of relaxation ahead. While that’s good news, it also means you have to be financially ready.
When we’re retiring
Some people will choose to keep working, at least part-time, beyond retirement age. But most hope to leave the workforce altogether. In the last five years, the retirement age was between 61 and 63, with women tending to retire just shy of their 60th birthday.
If you’re hoping to retire before 65, you need to plan ahead. By 2023, the Government will gradually have increased the pension age to 67. And with 75% of Australians over 65 relying on a full or part pension to get by, that could affect your ability to retire as early as you’d like.
The great super shortfall
Many Australians predict they won’t have enough for a comfortable retirement — estimated to be about $57,665 a year for a couple . According to recent research by MLC, about one third of Australians think they’ll fall significantly short of this target, with another 25% expect to fall at least somewhat short of it.
Take control of your super
There’s plenty you can do to boost your retirement savings. Use a calculator to estimate the amount you’ll need to support your ideal retirement lifestyle. If you discover you’re not saving enough, you can consider implementing some of the following strategies (if you are eligible):
- Salary sacrifice: contribute regularly to your super from your pre-tax salary.
- Personal contributions: put a bonus or tax refund to work by adding it to your super savings, or simply top up your super with a regular payment from your after-tax income.
- Transition to retirement: if you’re over 55 and planning to cut your working hours, a transition to retirement strategy could help you maintain your after-tax income and boost your super at the same time.
But remember, there are caps on the amounts you can put into super each year, so you need to do your homework before you invest.
For more information about boosting your super so you can retire when you choose, speak to Proxima Financial Planning.
Australian Institute of Health and Welfare (2013) ‘Life Expectancy’ https://www.aihw.gov.au/deaths/life-expectancy/
Australian Bureau of Statistics (2013) ‘One in five plan to retire at 70 or older’ http://www.abs.gov.au/ausstats%5Cabs@.nsf/mediareleasesbyCatalogue/FA701E410A126C43CA2573D700161420?Opendocument
Rice Warner, Reforming the Age Pension, August 2012.
AFSA (2014) ‘AFSA Retirement Standard’ http://www.superannuation.asn.au/resources/retirement-standard
MLC Retirement Survey, February 2014.