If you are a Gen X or Y retirement is an average of 33.6 years away, for some it will be up to 50 if the retirement age is increased. Not only is the age at which we retire creeping up but the time in retirement and money required to fund it growing too. Forced super contributions have not been increased in line with this growth and as a result there is now a broadening gap between what one has saved for retirement and their actual needs.
Recent studies have shown that for a male to have a truly comfortable retirement he needs to contribute 17.5% of his annual salary to super until retirement and for females the figure is 19.5%.
9.5% of that is currently taken care of by your employer and the rest is up to you! Is it really feasible to contribute 8-10% more of your income into super? Let’s put it into dollar figures to make it simpler. For an individual earning $60,000 this equates to an average $103 per week of extra savings.
If you committed to that saving plan at age 30 by the time you reached 40, it would have made an average $79,262 increase to your super balance. If we extend that out to retirement (age 70) we are looking at a $1,041,108 difference.
The price of instant gratification
What would you give up for an extra million dollars in retirement? Your morning coffee? Buying lunch at work? Using non-preferred bank ATM machines? Combining these simple techniques could easily get you on your way to saving $100 per week.
Unfortunately what we find for the Gen X & Y demographic is that if they cannot see an immediate benefit for themselves, they will not give it much attention. They are extremely quick to take on debt to satisfy a want for a new car, piece of clothing or electronics, yet extremely slow to put any money away as they cannot see any present day tangible benefit.
It all comes down to education, JBS can assist the Gen X & Y’s with their financial needs. It’s about taking control today and you will thank yourself when it comes to retirement. Start with what you can afford, get yourself into a saving rhythm and mindset that is sustainable and doesn’t impinge too much on your lifestyle. Keeping your savings plan manageable is key to its success.
For every 1 dollar saved before age 35 you will have 7 more in retirement. Would you turn down a 600% return anywhere else?
The information contained in this email should in no way be construed as a recommendation by JBS Financial Strategists with respect to the purchase or sale of any products or services. This newsletter contains general advice only and does not take into consideration your financial circumstances, needs and objectives. Your personal circumstances can only be considered by having an individual discussion. For any calculations shown, the data provided may reflect only a simple situation. Your circumstances may be different or more complex and require a different solution. JBS Financial Strategists are a Corporate Authorised Representative No.252571 of Professional Investment Services Pty Ltd ABN 11074608558, an Australian Financial Service Licence Holder No. 234951.