Have you ever considered your retirement savings, and thought 'I should get started on that'? You're right – it's never too early to start saving for your retirement, and it's also never too late to increase the amount of money you put into your super fund.
When you stop working, whatever age that is, you'll only have your super fund and any other investments you've made to live on. Assuming you retire at 65 and live to 85, that's 20 years of living that you need to pay for, without a working income. If you want to live comfortably, you'll need either $59,619 (for a couple) or $43,372 (for a single person) every year according to the Australian Securities and Financial Authority. If you prefer the modest life, you'll be living on approximately $34,560 a year (couple) or $23,996 (single).
Multiply those by 20, and you have what your super fund should amount to when you retire. Have you got enough?
Start saving as early as you can
If you're in your 20s and believe it's not going to matter because retirement is so far away, think again.
In order to give yourself the lifestyle you want when you retire, you should start putting money aside as early as possible. If you're in your 20s and believe it's not going to matter because retirement is so far away, think again. Putting money aside now will mean you can live a more comfortable life when you retire simply because you'll have enough money saved up to do the things you want.
Putting aside $500 a month (when you start working full-time), might seem like it's a whole lot, but if you budget for it, you won't miss out on doing the fun things you want to do each week. Plus, $500 a month is $6,000 a year, or $60,000 a decade – and that's before you accrue interest on it! If you choose the right super fund, you could see significant gains on that $6,000 of annual savings.
What total amount should you have when you retire?
Depending on your career progression, you could end up saving more in your last working decade than in your first 30 years. As you gain experience, you might also increase your base salary, and even employer contributions to your super fund. Don't worry if you don't have the magic $1 million by the time you're 55, because you might get there in your last 10 working years.
Further, if you're saving based on the 'couple' figures above, remember that your partner will also be putting money aside. Your combined totals could amount to something very comfortable when you both retire.
For more information about your current retirement savings plan, and what you need to make it to your goal, get in touch with CAPE today.
