For a comfortable retirement, the Association of the Superannuation Funds of Australia (ASFA) claims that a single person will need roughly $43,695 per year. For a standard retirement of 20 years, that means you’ll need $873,900 in your super by the time you’re 65. Does that sound likely, given your current super strategy?
Managing money at any age can be an especially daunting task, but this goes double when you’re young. Fresh out of university, you may not have much to your name and conversations about super and savings can quickly escalate to numbers nowhere near your own super balance.
There’s no better time to start saving than the present. The sooner you start paying attention to your super and personal savings, the more time you have to build your balances.
Research by the ASFA has found that 56 percent of Australians aged under 30 years are, at best, only able to give a vague estimate of their super balance. What might surprise some young Australians, is that on average their super balances are significantly greater than their personal bank accounts.
While it’s great to discover you have more to your name than expected, a lack of awareness can result in slow savings and financial hardship down the line. This is why it’s so important to take an active interest in your financial situation as soon as you are receiving a stable income.
Depending on where you are in life, you’ll be able to stomach a different level of risk in your investments – including those made through super.
MoneySmart defines a growth fund as one which invests 70-80 percent of your super into shares and/or property. The goal of these funds is to receive greater returns over a longer period of time. Growth funds may see fluctuations and losses in bad years, but in the long-run should achieve higher returns.
That’s why a greater risk profile may see more benefits for younger Australians – with extra years ahead of you, there’s more time to shoulder losses and reap the benefits of compound interest.
Despite this, Deloitte has reported that 81 percent of Australians under 35 are seeking guaranteed or stable investment returns. Don’t let fear of fluctuations stop you from choosing to see your savings grow.
There are a number of great ways to start saving. Cutting down on daily expenses by letting go of unused gym memberships or bringing a packed lunch to work is a step in the right direction.
Sensible saving is about providing for your future without sacrificing your enjoyment of the present.
You can also look to boost your super in a number of ways, including:
The ASFA claims that 30 percent of Australians aged 18-25 have more than one super. If this applies to you, consider saving by consolidating these down into a single fund. This way, you avoid paying unnecessary account fees.
Sensible saving is about providing for your future without sacrificing your enjoyment of the present. Remember to leave room in your bank accounts for purchases you care about, be that a new car or a dream vacation, as well as emergency money to protect you during hard times.
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