As a rule of thumb, it is suggested people should aim for a retirement income of between 50% and 70% of pre-retirement
salary/wages. If you want a retirement income equal to about 60% of your final salary, regardless of what that final salary is,
then it is estimated you will need to save around 15% of your income for 40 years. The problem here is that your employer is only compelled to provide superannuation contributions for you at the current rate of 9.5% of your income per annum.
The solution is simple – start contributing to super earlier in your working life, raise the combined rate of your super contributions to 15% by making personal contributions, and take heed of the following tips throughout your working life.
Young, single and independent
- Retirement is a long way off but starting early lays the foundations for future comfort.
- Maximise your government co-contributions—they will potentially add thousands to your super.
- If appropriate, take out disability insurance through your super fund. It is often the cheapest and most tax-effective way of providing insurance cover.
- Choose an investment strategy that suits your long-term risk profile.
A family and a mortgage
- Your focus may be on repaying the home loan, but don’t forget your super entirely.
- Take out life and disability insurance through superannuation. A mortgage and young children mean insurance is a top priority.
- Check eligibility for a tax offset on spouse superannuation contributions and government co-contributions.
- Review your investment strategy and risk profile.
The “in between” years
- A higher income and a smaller mortgage open up the opportunity to boost your super.
- Find out how salary sacrifice can boost your super savings.
- Review your insurance cover and investment risk profile.
Retirement is looming
- Over 55s enjoy some great incentives to contribute to superannuation.
- Combine salary sacrifice with a transition to retirement pension.
- Review your insurance cover, investment strategy and risk profile.
- Start comprehensive retirement planning.
- You’ve made it. For retirees over 60, withdrawals and pension payments are tax free!
- Review your investment risk. Keep enough growth in your portfolio to ensure your money lasts as long as you do.
- Review your insurance.
- Stay active and enjoy life (and keep working if you want to!)
Remember, it’s never too late to start…
For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.
Disclaimer :Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.