5 ways to save more for retirement
Building a retirement nest egg is easily the longest savings exercise you'll ever do. While the superannuation system is a passive way to save money for your golden years, some experts believe the amounted fund won't be enough in the face of inflation and other factors.
Deloitte recently opined that Generation Y (those born between the '80s and the early 2000s) won't have enough to retire on, even if they amass $1 million through their superannuation funds. It shows the sheer scale of the matter when we look at the average super savings amount.
Challenger used Rice Warner statistics to see what Australians have generally saved during different stages of life. As of June 2010:
- The average 25 to 29-year old had $12,200 in their super fund
- By 35 to 39, this had grown to $41,200
- At 45 to 49, the average super member had $73,800
- Around retirement age at 60 to 64, they had amassed $159,600
However, Australian Bureau of Statistics shows how quickly this money can spend. By 65 to 69 years of age, the average superannuation account held $72,247. It's clearly better to save as much as possible for retirement, then. Here are five ways you can help yourself do just that.
1) Downsize your property
Do you have more space in your home than you need? It's particularly the case when your children fly the nest and you're left with a spare room or two. Downsizing into a smaller property can help you reduce your mortgage repayments and pay off your home loan sooner.
It's a difficult decision to make, with your house probably full of good memories – though, from a financial perspective, it makes good sense. A mortgage broker in the Whitsunday Shire will help you go through your home loan options.
By 65 to 69 years of age, the average superannuation account held $72,247
2) Budget, budget, budget
Small amounts of cash add up, and you can find your monthly savings mounting ever higher if you cut back on some non-essentials. Why not try that value brand at the grocery store, or opt for a car with better mileage per litre of fuel?
After all, putting even an extra $20 aside each week will accumulate. Doing so for 10 years will bolster your savings account to the tune of $10,400.
There's no need to be miserly, but if you can save a little more, you may thank yourself once you reach retirement age.
3) Consider a property investment
Property investors aren't always those with deep pockets and private jets; they can be everyday families made up of enterprising individuals. Australia's property market is thriving, and the Whitsunday Shire may just be an ideal location for a savvy investment – meaning you won't have to move to find a booming market.
Again, it's best to speak to your mortgage broker for a 101 on entering the property investment game. If you then feel it is right for you and your family, you can start building equity and wealth in a tangible asset.
4) Consider changing banks
While it's not for everyone, the Australian Securities and Investment Commission (ASIC) says that a simple way to save money is to look closely at your bank's fees. Different banks offer different terms, and some may suit your situation better.
For instance, if you find yourself regularly dipping into your overdraft, some banks will not charge you for doing so. Others offer free monthly statements or don't have a limit on minimum deposit amounts. If you can match your bank to your saving characteristics, you can hold on to more money and put it towards retirement.
Those aged 50 and over plan to take between four and five holidays a year.
5) Plan ahead
What do you really want to do when you retire? Would you like to travel and finally visit the places you've had on your bucket list for so long, or settle down and relax in your own home? Your expectations will have different budgets.
The New York Times recently quoted figures which state that travelling during retirement has jumped in popularity from 9.7 per cent of pensioners in 1993 to 13 per cent as of 2012. Meanwhile, the AARP found that those aged 50 and over plan to take between four and five holidays a year.
Whatever your intentions, it's worth sitting down and making a plan, including as estimated amount of how much you'll need to make your retirement dreams come true.
When it comes to your superannuation withdrawals, it's also important to think ahead. When you begin to take out your retirement savings, you have three options – a lump sum, monthly payments or a mixture of the two.
Keep in mind that the longer you keep money in your superannuation account the more interest it will attract, so you can choose the right option depending on your planned expenditures.