How to increase retirement savings

Planning for retirement can be both exciting and stressful. With reports and research talking about the importance of planning for retirement early because of the consequences of starting it late, it’s no wonder people are stressed. You might feel you’re ready for retirement, but you’ll want to assess whether you’re financially ready too.

Despite concerns many people have about not having enough money to tide over for lifea Grattan Institute study reveals that retirees will be able to live more comfortably than those still working – meaning, retirees have plenty of money to sustain a similar or even a higher living standard as when they were working. These individuals may experience a comfortable retirement lifestyle thanks to a combination of mandated super contributions, non-super savings, and the Age Pension. They can expect at least 91% of their pre-retirement income.

To realise one’s lifestyle potential, it’s important to get started on building a healthy nest egg. There are plenty of things you can do right now to help you feel more secure in your financial freedom once you retire.

Learn how to take advantage of opportunities and increase your retirement savings now.

Your lifestyle today will dictate your retirement lifestyle

For individuals planning to retire early or are currently trying to catch up, one thing’s for certain: your retirement lifestyle will depend on the quality of your current lifestyle.

How much someone spends today and expects to spend in the future will determine how much they have to save to prepare for their future ahead. You might need more or less, depending on how you visualise your retirement life and the cost of living could vary as you get older.

Retiring with a healthy nest egg starts with learning new money habits today.

Three simple ways to boost retirement savings

Sacrifice part of your salary

Salary sacrificing can be a tax-effective way to grow your super. Employees may set this arrangement with their employer to allocate a portion of pre-tax income to a super fund. By ‘sacrificing’ a part of their salary, they can potentially pay less tax than if they’d received it as take-home pay.

Make personal contributions

What’s left from after-tax income can be poured into a retirement fund. This personal contribution allows individuals to benefit from the low tax rate within super, which may be lower than their marginal tax rate, or simply, the rate that would need to be paid if money was contributed into another type of investment which is outside of super.

Before making personal contributions, remember that since it’s considered non-concessional, it must not exceed the cap ($110,000 in 2021/22) because there may be penalties to pay. In order to access super monies, a condition of release must be met and therefore may not be suited to your circumstances, your financial planner can assist you with this.

Reduce tax by contributing to spouse’s super

A tax offset is available for individuals who make after-tax contributions to their spouse’s fund. This applies to those whose spouse is unemployed or earns less than $37,000 or less per annum.

Making the right financial decisions will be vital in having peace of mind during retirement. But while many are hoping to retire early to enjoy the fruits of their labour, many people are not taking the right steps. Are you on track to retire when you want to?

Working alongside a professional financial planner will help you make the most out of your super contributions.

Find out more ways to boost your retirement nest egg by talking to us. Book an appointment with a Banks Group expert today.

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This article is intended for general discussion and is not intended to represent specific advice. Banks Group shall not be responsible for any entity that acts on any of the comments in this article without first obtaining specific advice from Banks Group. For further information, please click here.

 

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