I don’t know about you, but for me time is just flying by. Even more so since we had our daughter. Time seems to have gone into hyper-drive!!! What is that??? One minute I was 27 years old, footloose and fancy free roaming the globe. The next minute I am 41, married, with a mortgage and a four year old, hearing the word “Muuuuuummmmm” several million times a day. A completely different life. But somehow the years in between seemed to have just whizzed by.
And from what my mum tells me, time goes by even faster from here on in – next stop 50, then 60! What the?????? I was pretty sure that this was never going to happen to me! I guess it is! So I had better make sure I am financially prepared for my retirement. Especially given – if the current legislation passes– I won’t be able to claim the age pension until I am 70!! I am pretty sure I would like to retire before 70, so I need to make sure that I have enough superannuation to make that happen. Otherwise it is the Newstart Allowance (or whatever they will call it by then, if it even exists) and cat food for me! Scary!
So how do I decide whether I have enough super? It’s a tricky question as there are lots of factors involved; however, here are three options that might work for you.
(1) Run some calculations
First you need to take a good look at your current financial situation. This includes listing all your assets: things like savings, shares, house, car/s and superannuation. Then you need to list all your debts: things like your mortgage, credit card debts and personal loans. Add up your assets and deduct your debts and you will have a fair idea of how much you’re worth now.
Next you need to think about how much income you will need to live on when you’re retired. Here is a hint – the Association of Superannuation Funds of Australia (AFSA) Retirement Standard benchmarks says that a comfortable lifestyle for a couple can cost around $56,000 a year. A modest lifestyle, AFSA says, costs about $33,000 a year per couple. You might think you need more or less than this depending on your current and expected future lifestyle.
The last factor to think about is how long you might last! Apparently retired men in Australia live to an average of 86 and a retired woman until 90! This means if you retire at 65 your superannuation money has to last you on average 20-25 years! That is quite a lot of time!
(2) Use a superannuation planning calculator
Superannuation calculators are quick and easy to use, and take into account a lot of factors around your individual circumstances. They are a fast way to get a grip on whether your superannuation is on track. There are plenty around, the Money Smart website has one here. I used the one on the CareSuper website. To check it out click here. I found it really useful and it took me less than 10 minutes to get an idea whether my superannuation was on track for the retirement lifestyle I want.
(3) Get some personal financial advice
A financial planner can help you determine whether your superannuation is on track to pay for your retirement. They will work with you to determine your current financial position, your goals, and your expected post-retirement lifestyle. The financial planner’s advice will be tailored to you and your circumstances. If you are a member of some industry funds you can access some services of a financial planner for free. For example, CareSuper members get financial advice over the phone on a range of simple super-related topics as part of their membership, or members can see a financial planner at their offices for more complex advice where the first session is free. If you are a member of an industry fund and want some personal financial advice this might be a service that is worth looking into.
Figuring out whether your super is on track to fund your retirement is really important, especially given the pension age is definitely on the rise. Nobody wants to find out that they have to work longer than expected to fund their retirement lifestyle, or worse that they can’t afford the retirement they would like. Your super is your money and one day you will need it, so look after it now and it will reward you later. So far my superannuation appears to be on track, so hopefully there will be no cat food in retirement for me! However, things change and it is something I will have to keep on top of, as the years speed by!
This post is sponsored by CareSuper.
have received a fee from CareSuper to blog about super, however this post contains my own opinions. While I am not personally recommending CareSuper, information about superannuation can be obtained from their website caresuper.com.au and it’s always good to get your own advice about financial matters.
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