When planning for your retirement it is easy to get caught up in numbers and head-spinning calculations.
We want to simplify it for you by covering the most important factors to consider for your superannuation and retirement plans.
So, when calculating how much superannuation you really need, take the time to jot down the key elements of your dream retirement.
What does your retirement look like?
The first step in getting to a realistic number - and being able to save effectively - is to consider what you want and need in your retirement years.
The key 6 factors to think about BEFORE you reach retirement age:
- Are you heading for a mortgage-free life or are you happy to keep paying rent?
- Will you be enjoying overseas holidays or a simple home-based lifestyle?
- Are you likely to be caring for grandkids or will you be away from family support?
- Will you be paying medical bills or does your private health cover this?
- Do you have lots of recurring payments, registrations, and subscriptions you will want to keep paying for in retirement such as private health cover, paid TV subscriptions, golf, or gym memberships?
- Do you know if you might want to do some form of paid work even when effectively retired from your “normal career?”
You can have all the things you want in your retirement and live a full and active life if you have the means to fund it!
Start your financial planning now so that you can be sure to save the correct amount over the months and years.
For example, if you are already close to paying off your mortgage and retirement is a while off, then you have a huge financial asset compared to someone who might still be paying a mortgage or needing to pay rent in their retirement.
Likewise, you need to consider any possible medical costs you might need to cover in your later years, and whether you have private health that will cover these costs or not?
So, how much?
Recent data by Government and superannuation firms points to some alarming statistics though – and highlights that many Australians are going to fall short. The research shows that to enjoy a comfortable retirement, 30-year old men and women would need to have around $61,000 in their super account today, but on average, they are currently between $35,000 and $39,000 short of that balance.
Women currently in their 60s face the biggest super gap of more than $275,000, based on this data.
How can you get ahead with your super savings and be on track for a pleasant retirement? The answer might be in your hands after all.
Employer contributions and personal top ups
Your employer will be putting away a minimum of 9.5% of your salary into a super account of your choice. This builds up over time with compound interest playing it’s part too.
If you want to add to this fund with your own contributions this is most advised in most cases.
If you’re one of the lucky ones and have the opportunity to salary sacrifice extra super contributions this is a great set up - but even if you don’t have the option to salary sacrifice, you can still add extra to your fund. Even a modest amount added by you now, can add up to thousands come retirement time.
Are you interested in talking to a financial planner regarding your superannuation set up? At Profacc Accountants & Financial Planning we can help you maximise your superannuation balance so you are ready for when you hang up the boots, stop work, and sail into retirement life.