Is your nest egg big enough for retirement?

The ASFA’s (Association of Superannuation Funds of Australia) latest quarterly report of annual post-work budgets indicate couples who want to live in comfort during retirement need at least $59,619 per year to do so.

Over 10 years, that’s at least $596,190.

Quality of life during retirement is something most Australians think about. We all work hard and we all deserve to relax. We all deserve to take the occasional holiday with our loved ones without having to worry about basic expenditure such as health insurance and a reliable car.

According to 2013/2014 ABS data reported by the ASFA, the average superannuation balance at retirement (between the ages of 60 and 64) is:

  • $292,500 for men
  • $138,150 for women

This data indicates more and more Australians will need to rely on the aged pension in their post work years.

What is a comfortable life?

As described by the ASFA, the average of $59,613 per year takes into account the following ‘comforts’ (as well as life’s basic necessities):

  • A reliable car
  • The purchase of household goods
  • Private health insurance
  • A range of electronic equipment (mobile phone, camera, laptop)
  • Quality clothing
  • Domestic and occasionally international travel

Many Australians who rely on the aged pension, or those who do not have adequate super balances, make sacrifices during retirement they wish they didn’t need to.

But there are many things you can do before you retire to place yourself in the best possible position to be both comfortable and confident.

It’s never too early to start thinking about your super and retirement plan. In fact, the earlier the better. With a good retirement plan, you won’t need to rely on the pension, and you can spend your well-deserved break doing whatever your heart desires.

Here are 3 ways to grow your nest egg

  1. Pay off debts as soon as possible: Retiring with debt can make it very difficult to live a comfortable life. Consolidating debt early in life and paying off mortgage balances sooner than the loan term can help individuals and couples save thousands on interest. These savings can be contributed to your retirement fund.
  2. Invest in property as early as you can: Many property investors are motivated to invest simply to have the ability to live independently during retirement. Investing in property can allow you to generate wealth in the form of rental income or profits from the sale of your investment. Alternatively, you can buy an investment to allow yourself to downsize later in life and benefit from the profits of selling your existing property. Investing early will reduce the likelihood of retiring with debt and will increase your ability to compound enough growth over time to deliver healthy profits.
  3. Make additional super contributions: You can grow your super balance by making additional contributions towards your superannuation fund on top of your employer’s annual 9.5% contributions. You can do this by making your own payments from your after tax income, or by ‘salary-sacrificing.’ Salary sacrificing involves your employer re-directing your desired portion of before tax income towards your super fund. The benefit of this is that the amount received by your super fund gets a special concessional tax rate of 15%.

Get advice, make a plan and be confident for the future

With so much going on today, it can be hard to think about tomorrow. Regardless of how you are currently positioned for retirement, and regardless of your age, acting today will make a considerable difference to your comforts during retirement.

For information on how to pay off your mortgage and debts faster, how to invest in property, or how structure your super contributions effectively, WhiteStar Group’s friendly Finance, Property Investment and Accounting consultants can help. Call us on 1300 652 842 or complete our contact form below.