With all the great (and pleasant) noise being made about Superannuation efforts and their considerable link with post-retirement living, I thought it might help to chart a Super roadmap for people of all ages. I mean, a 30-year old won’t think about his Superannuation fund as a 50-year old or a 70-year old. For the 30-something guy, retirement is a distant possibility not looming anywhere close to the horizon yet. For the 50-something person, on the other hand, it has become part of the to-be-embraced fate and for the 70-something guy, well, he is there and living it.
“Ability to earn” and “propensity to save” changes with age
We do not earn equally and save equally throughout our lives. Our ability to earn and propensity to save changes with the colour of our hair; so, let me focus my energies in segregating the Superannuation effort based on age.
Teens
If you have brushed past the 18th year of your life and start to earn a minimum of $450 per month, you are entitled to a compulsory Superannuation guarantee of 9.5%. If you are earning more than $450 but less than $500, encourage yourself to make after-tax deposits to your Super because the government dittos your effort with an equal deposit in your Super. Being a teen can be fun!
20’s
If you are in your 20’s, chances are that you have multiple accounts, brought forth from your teen days. There is a statistic which says Australians have as much as $8,300 in lost Super on an average. The process, well and truly, begins in the 20’s, one supposes.
30’s
The Baby Boomers thought 30’s was a time when one could still go ahead and avoid the later-day reality of retirement. Today, the self-same generation is reaping weeds. A majority of baby boomers are looking at bleak retirement prospects and many are mulling over working well into their 70’s. This is to establish that 30’s is when you should start thinking like 50’s — start believing in retirement and start saving for it. Start with your salary sacrifices because the 9.5% is not going to suffice. Of course, this won’t be easy because this is the time you are perhaps saving for your home. But strategise you must!
40’s
While 40’s is likely to be the decade when you earn most, the beautiful fact is more than compensated by another fact that you are also likely to spend most. Your child is not yet a teen this is an assumption) and if you have more than one of them, there are a host of expenses associated with bringing them up. This is also a time when people back their pursuits and spend (sometimes recklessly) on them. Thankfully, there is a part of our brain which wants a mortgage-free life and it peaks when we are in our 40’s.
50’s
This is when you realise with a cold shudder that you missed on the savings boat and unless you begin to devour grounds, you won’t have enough savings to flesh out a decent post-retirement life. If you are thinking whether you should reduce debts or cushion Super, make yourself good enough to think both. Time, for all you know, might begin to run out.
60’s
60’s is when the “hammering feeling” associated with the word TAX begins to fade. It is like people reach an official tax haven. Suddenly, they start seeing exemptions everywhere. People can withdraw a large sum without paying tax and have their “pension phase” investment returns from within their funds exempted from tax, too.
Remember that 30’s is the new 50’s when it comes to boosting your Superannuation fund and taking serious steps towards retirement planning.
How are you placed with your retirement planning?
