Retirement: How full will your glass be if you turn off the tap?
“More than one-third of Australian pensioners are living below the poverty line, making the country among the worst performers in the world for the financial security of older people” reports the OCDE (Organisation for Economic Co-operation and Development).
Why is it important to start thinking about retirement?
It’s never too early to start thinking about retirement. Reality is, that once we reach the end of our working life, some sort of income is needed to live off. Laws around superannuation keep changing, but generally speaking the funds in super will run out within seven years.
Plant now, reap later
The longer you put off creating a strategy for retirement, the longer you will have to work for your assets. Start preparing for a stable retirement by eliminating debt and paying off non-deductible debt (car & home loans/credit cards) as soon as possible.
Know how much income you will need to live on and make a plan for your financial future, taking into consideration investing in strong assets such as property.
Saving money for your future is a bit like watching a plant grow; it takes a long time, but there are ways to make it grow faster and without paying the ATO (Australian Tax Office).
How it works
Typically, when money is put into a savings account it’s earned from an employer, but before they pay us, a percentage for tax is taken out and the rest given to us. You would then take some of this net [post tax] income and put it into a savings account. Once in there, you start to earn interest [for example] 2%, but before you are able to enjoy it the taxman will take his portion as well.
Another way to save and avoid tax is to salary sacrifice directly into superannuation which means your employer can pay part of your wages into a superannuation account while it earns interest and grows and you won’t pay tax.
A mortgage broker can guide you through your income and retirement plans and help find a solution tailored to you.