Is retirement on the horizon for you or your spouse? Retirement often seems either far away or right around the corner — depending on how close to retirement you are. So the most important things you need to know about retirement may not be what you’d imagine.
But they’re really very simple:
- Retirement should be on your radar today — even if you never plan to retire
- And now is the time to start saving for retirement, if you haven’t already started
Planning for retirement
Are you avoiding the thought of retiring from active service or work? This is very common – you are not alone. That’s because many people visualise retirement as retiring from life, sitting around the house staring at the TV, pulling weeds out of the garden, etc. For some people that doesn't sound very appealing. Of course we never retire from life or from our Christian vocation. However, planning for your financial future after your retirement from work is important and needs some thought.
Lutheran Super has some easy steps that will assist you putting things into place for your retirement.
When do I start saving
Compulsory employer super contributions provide a good start for your superannuation. Currently, employers pay a minimum 9.5% of salary to your designated super fund.
Voluntary contributions can start at any age, and it shouldn’t come as any surprise that the earlier we start planning and contributing to our retirement, the better the eventual financial result will be. For example, starting early enables you to take greater advantage of capital growth in property assets and the benefit of compounding interest in superannuation.
Otherwise, if you only start planning for your retirement in your late 50s or early 60s, you will need to inject more capital to grow your investments to the level you’d like them to be.
How much do I need?
When people are planning for their retirement, they often ask financial planners ‘How much do I need?’, only to be told ‘How much do you want?’ A fair enough response, but not overly helpful.
If you’re finding it hard to get an answer for this question, there are plenty of freely available websites that can give you a good insight, such as the ASFA website.
How can I add extra?
Make salary sacrifice contributions from your pre-tax salary.
Where to get initial assistance or advice?
There are many websites that claim to provide you with sound advice about how to plan for your retirement, but are they independent and unbiased? Often it is difficult to tell, so when doing your initial research, be sure to go in with your eyes open.
One source that we can certainly suggest is the ASIC Money Smart website, which has a great deal of information on superannuation and retirement, and is well worth a look if you are starting out or not sure what to do.
Remember, retirement needn’t be a subject just for those looking to retire in the near future. The earlier you start planning whilst still working, the better the results and the more rewarding your retirement will be.