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Written by Matt Kirk Published: May 6 2020 Investments
Australians are often described as poor savers however we’ve done a pretty good job at saving for our retirement since superannuation became compulsory in 1992.
The nation’s superannuation balance tops $2 trillion and will only get bigger as the youngsters who started work in the 1990s build up balances over what could be fifty-plus years in the workforce.
Australia is still considered to have a superannuation savings gap, with researchers saying 9.5% of wages going into super plus the age pension won’t be enough to give people enough income in retirement.
We tend to spend modestly once we leave work but today’s retirees are spending more than their predecessors, says a research report released this month from the Australian Centre of Financial Studies.
It found self-funded retirees enjoy a significantly higher standard of living than those relying on the age pension.
About 30% of super fund members make voluntary contributions to super such as by salary sacrificing or adding after-tax income to boost their balances, according to research by Jun Feng, of Monash University’s business school and Paul Gerrans from the University of Western Australia Business School. They find people are more likely to make extra contributions to their super as they get older.
There can be tax benefits for making extra contributions and people on low incomes may qualify for a co-contribution from the Federal Government for any after-tax payments they make to their super.
It’s important to nurture your super and worth taking the trouble to sit down and calculate if you can invest any idle cash.
Tipping in spare funds can make a huge difference to your balance over a working lifetime.
The earlier you get started, the more likely you will enjoy greater comfort and the ability to make choices in retirement.