Don’t become the oldest worker in town
More people are now being forced to work through their retirement golden years because they lack the money to retire when they want to.
Are you at risk of joining this ‘grudge workforce’ ?
If you are, don’t panic. Whether your retirement is an unimaginably long way off or just a few short years away, there are steps you can take now to avoid having to keep working into your 70s.
Start topping up your super
The big hitter in potentially avoiding the grudge years is simply to start putting more money into your super account.
Obviously, the more you pay in, the faster your savings will grow, but even small regular amounts can make a big difference – especially if time is on your side.
For example, topping up your super with just $20 a week from your before-tax salary (‘salary sacrificing’) can really help. As the chart below shows, a 35-year-old earning $60,000 a year could have over $100,000 extra when they retire at age 65.
How to start salary sacrificing
It’s easy. Just ask your employer’s HR or Payroll department to divert some of your pre-tax salary into your super account every time you get paid. Usually you just have to fill in a quick form.
Take evasive action – get on top of your super
- Talk to your adviser for a super health check and to create or refine your action plan
- Learn more about salary sacrificing and other ways to grow your super
- Let us find out if you’ve got any lost super . (There’s $18 billion of it out there!)^
- Download a free super guide – and don’t worry, they’re quick and easy to digest.
*Assumptions: The age 25 figure is based on an initial super balance of $10,000 and salary of $40,000 per year. The age 35 figure is based on an initial super balance of $30,000 and salary of $60,000 per year. The age 45 figure is based on an initial super balance of $75,000 and salary of $80,000 per year. Each super fund earns a rate of return (before earnings tax) of 6.5% per year. Earnings are calculated at the end of the financial year. Retirement is at age 65. Figures are expressed in future dollars. Salary, Super Guarantee (SG) and salary sacrifice are indexed annually at 3%. Top up is annualised and contributed at the beginning of the year. The government has proposed legislation to postpone by two years the increase in the SG from 9.25% to 12%. If passed, this would change the outcome of this example.
^Commissioner of Taxation Annual Report 2011-12