The Australian Institute of Health and Welfare tells us that life expectancy has increased from an average of 71 in the 1960s to an average of 82 from data collected between 2016 - 2018*.
But how many of you knew that? Research from National Seniors Australia found that older Australians underestimate their own life expectancy by up to seven years! Advancements in fields of health, wellness, medicine and technology are significant, but it’s important to think about what impact they could have on the longevity of your retirement fund.
This is where a ‘future fit’ superannuation strategy comes in handy. Beyond the basics, it’s important to really consider your life and longevity as part of your personal saving strategy.
Setting yourself up for success
Thanks to the power of compound interest, the way you save in your 20s and 30s may snowball into what eventually becomes your retirement fund; the more you put in earlier, the more you may get out later. And while you might think retirement is tomorrow’s problem, we think that there’s never been a better time to plan for when you’re older, than right now.
- Estimate how much you’ll need: Consider the type of retirement and lifestyle you want, financial guides of how much that will cost, and life expectancy based on your current age group (not when you were born).
- Find tools and ask questions: Moneysmart’s Super Calculator can help here, and if you don’t love the outcome, a financial advisor could help with getting you on track. We’ve also developed this nifty table so you can easily check to see where you’re at.
- Consolidate your super accounts: If you’ve worked a bunch of casual jobs over the years or opted for your workplace’s super fund each time you change jobs, you might have multiple super accounts floating around stinging you with fees.
Pro tip: MyGov makes tracking and consolidating your super, well, super easy! Head here to get started.
Ways to supercharge your retirement savings
Once you’ve whipped your super fund into shape, we think it’s time to start thinking about how your savings could work even harder. The earlier you start, the bigger the impact and the more prepared you’ll be for whatever age you find yourself at retirement.
- Switch up your super strategy: Being young has financial advantages – you can experiment with a mix of higher-risk, higher-reward investment portfolios (as much as you’re comfortable with) because you have more time to recoup any potential losses if things take a dip. Switching your portfolio is often a simple process – talk to a financial advisor to find out what’s right for you.
- Make additional super contributions: You can contribute more of your pre or post-tax income to boost your fund over and above the standard 9.5% (10% in 2021!) of your wage. The more you contribute, the more it may grow down the line. The government may also make contributions on your behalf if you fall under a certain income level.
- Review your plan often: Your retirement plan should be tailored to you and your ever-changing circumstances. Check in on your retirement fund and strategy every few years, and adjust it with a financial advisor accordingly. You may thank yourself later.
They say the best way to predict the future is to create it for yourself. While no one can predict what the next few decades will hold for you, small financial decisions made early in life are amongst the most tangible ways to guarantee a retirement you’re comfortable with. After all, you’ve earned it. Literally.