An article on the website news.com.au talks about the current Superannuation savings scenario in Australia and why people would do well to review where they are headed. Unless Australians take stock of the scene, they might face a bleak retirement prospect. It is ironical that a nation which can boast of $1.8 trillion in Super cannot take help from this retirement vehicle (read the Sole Purpose test) to aid their post-retirement life.
Ageing population on a rise
We have our job cut out when it comes to the percentage of our ageing population. Already, our pension system may have to cope up with 1.7 million extra seniors. Men need something like $610,000 and women, owing to their higher life expectancy, require close to $680,000 when they retire. Look at it this way: to achieve what’s needed, people earning $60,000 annually will have to put away $230 a week right from the time they hit their 30s. The reality of present-day Australia is a lot different.
Drop in more in your non-compulsory kitty
The article points out the ineffectiveness of the contribution caps which hinder people to catch up with the savings if they once fall out of the line. If only people were allowed to drop close to $50,000 in their non-compulsory Super, they would be able to offset years when they made little or no payments. In the given context, the $30,000 ceiling hurts. For starters, this is $5,000 higher for those who are 49 years of age or above.
You can read the original article here.
Reality tough for the Baby Boomers
One reason why the Baby Boomers are not having it any easy is that they never thought retirement to be real. This made them bypass savings considerations early on in their lives. Perhaps, they were ignorant of the limitations of the pension system. It is not an endless bounty folks!
It is here that I want to ring the caution bells. Individuals, just as soon as they hit 30’s should start giving priority to savings. Dropping a wee bit more in your Super kitty each time you make a contribution, curbing erratic lifestyle, and reviewing retirement savings from time to time may help.