“It is better to have a permanent income than to be fascinating.” - Oscar Wilde
“How much will I have to retire on?” is a very frequently asked question by members – yet one that is pretty much impossible to answer with any degree of certainty.
“It depends” is a frustrating answer to a reasonable question, yet the entirely honest one.
What will determine the size of my super?
The size of the variables that will determine the value of your super pot when you retire – perhaps many years from now – are unknown in advance.
However, there are a number of factors to consider to maximise your chances of being able to meet your long-term financial goals for retirement:
- The size of your super fund today – you can’t change how much you’ve saved in the past, but your current balance is important, especially for older workers.
- How much you and your employer are contributing regularly to your super – the other key input is how much you save in future.
- How much risk you choose for your super – higher growth funds are more volatile, but can generate higher long-term returns, which will boost the size of your super.
- Market returns – whatever level of risk you choose, the return of the markets in which you invest will have a big influence on your super.
- Fund performance – different funds have different styles which will deliver different returns.
- Taxes – taxes reduce the size of your investment over time and are subject to change; saving within a super fund can be a tax-efficient strategy for investors.
- Fees – fees also diminish your super over time; these will vary depending on the type of super fund you choose, the fee structure of your super and the type of investments you choose.
- Your retirement date – generally the longer you work the larger your super will be at retirement, although your investment returns will also be important during additional work years.
What can I do now?
- Making extra contributions – and increasing them each year, even a little – might get you to your savings goals that much quicker.
- Start early – every extra dollar contributed in your 20s will be worth way more than one saved in your 60s thanks to the magic of compound returns.
- Think about your investment goals and what risk level is right for you at this stage of life.
- Investing retirement savings in your super generally makes sense for most people, but consider seeking advice from a qualified financial adviser to discuss your personal circumstance.
Your financial adviser can help you with the best way for you to boost your super, or speak with an adviser from Mine Super Financial Advice. You can book a free initial consultation today.