If there’s one factor that unites many Australians, it’s a lack of savings to enjoy a decent retirement lifestyle.
How much do you need?
The ‘Retirement Standard’ produced by super industry body ASFA, benchmarks the annual budget needed by Australians to fund a comfortable or modest lifestyle in their post-work years. What is considered a modest lifestyle? A modest retirement lifestyle for retirees refers to being better than the age pension but still only able to afford very basic activities. The latest figures show that a couple needs combined annual income in retirement of just over $40,000 to live a modest retirement, while a single would need $28,000 per year.
Click here to see a detailed budget breakdown. Both budgets assume the retirees own their own home and are relatively healthy, that is, it does not take into account frailty risk and potential additional costs for health care and support later in life.
How are we shaping up towards meeting that standard?
Among women aged 55-64, the median super balance is $118,6001. Men fare slightly better with a median super of $183,000.
It’s not hard to see how these sorts of super balances may not fund more than a modest lifestyle for very long.
Here are some ways to increase your super balance to help bridge the savings gap.
Ways to grow your super
Australians can increase their super savings through some very simple steps.
First, check how many super funds you have. If you have more than one, you could be doubling up on fund fees and life insurance premiums. Unnecessary fees could be going towards your retirement savings instead if you consolidate your super into a single fund.
Next, don’t just rely on the bosses’ super contributions known as the super guarantee. One of the great aspects of our super system is that you can make your own additional contributions, some of which will provide you with tax savings today, as you grow your super savings for tomorrow.
You may be able to claim a tax deduction by making what is called a concessional, or before-tax, contribution to your super in the current financial year. There is, however, an annual limit of $25,000 which includes the super guarantee amount from your employer.2
So, if your boss contributes $20,000 to your super fund this financial year, you may be able to chip in an extra $5,000, which you could then claim on tax.
A third thing that can increase your super balance when it comes time to retire is making decisions during your working life on how your super is being invested within your fund. Funds offer a variety of investment options and you are able to choose what is most suitable given your comfort with investing, time before you will be retiring and your financial goals.
Expert advice has never been more important
Building wealth for your retirement years is a lot easier when you have support from an expert. Setting up your super as early as possible, so you are growing your money in the right fund with appropriate fees and invested in the best way for your needs, will help you better achieve what you will need in the future.
A FinChoice adviser can assist you with consolidating your super into a single appropriate fund, making investment decisions and working out additional contributions from year to year, all in line with knowing your unique circumstances and goals in life.
We can put you in touch with a FinChoice adviser, who can explain simple strategies that work for your circumstances, to help you grow your retirement money.