“Saving money isn’t about buying bigger and better things all the time. It’s about being prepared to take care of your family.” – Dave Ramsey, businessman and money advisor.
Are you saving enough money for your retirement? It is a question that often invokes an eye-roll from millennials, but it should be something everyone is thinking about. We are creating more debt and living longer and that combination is worrying.
Association of Superannuation Funds of Australia has released statistics that shows the average annual living expense for retirees is $43,000 for a single and $59,000 for a couple to live a comfortable lifestyle. The flow-on effect is that if people don’t have this amount saved for the years after retirement, who will be left with the bill? Often that responsibility is passed onto families or the government. Therefore, you need to be educated on your retirement plan.
Here are some key pieces of advice that should set you on the right track.
Start saving now
The best time to start saving for our retirement was ten years ago, the next best time is right now. By putting a little aside each week, it will take away more of the financial stress the older you get. Don’t forget that in between that time you may want to have a wedding, kids, seek a home loan, travel, buy a car or pay off personal loans. All of these key life events are often planned for because they come before retirement.
Forbes reiterates the fact that if you start saving in your 20s and 30s you would have almost four decades of financial support behind you. The later you start, the more frugal you have to be with your annual income in later life.
Make sure you have an automatic enrolment with your employer.
When you start a new job, often your workplace will offer you an automatic superannuation account. This means that a portion of your pay automatically comes out of your paycheck and is saved for your retirement. “Out of sight out of mind” really does apply to being successful with saving for anything. If people are able to see the money, it is more tempting to spend it.
The Financial Planning Association of Australia released the results of a global study that showed over 70 per cent of Australians did not know who to trust when it came to for financial planning. People were struggling to find the right information out there and were therefore making ill-informed decisions about their retirement. No wonder societies are becoming less and less prepared for old age, their resources were not credible and often from social media.
Seek professional financial advice
Yes, a financial advisor may cost you money now, but they can help set you up for a stress-free financial future when you retire. It is important to talk to the experts because it is their job to calculate what you need when you are no longer working. MoneySmart says that recent retirees often spend a lot of their money in the first couple of years of retirement. Their new sense of freedom allows them to travel and pursue hobbies. A financial advisor will factor that in when planning for you.
No one likes financially planning for the future because it means that you have less to spend in the present. However, it doesn’t just concern your life but your family’s as well. If you put a little away each week for your retirement, it takes a huge amount of pleasure off you and your loved ones.
Talk to the team at Border Bank about saving for your retirement, ‘future you” will be eternally grateful you did.