As with most things in life, it’s best to get in early when it comes to sorting out your superannuation.
But if you’ve waited until middle age to start thinking about retirement, don’t panic.
The New Daily brings you some failsafe tips for salvaging, managing and increasing your superannuation once you hit the big four-zero.
Greg Harper, general manager of advice services at CBUS, says that the main cost for people in their 40s is a significant mortgage.
Do whatever you can to eliminate this and any other non-income producing debt, such as money that you owe on credit cards.
This means “living within your means by earning more or spending less,” Mr Harper said.
Look at your retirement goals
Empowerment coach Linda Fitzhardinge of Women Building Wealth says that most of the women in her seminars say they want to retire at 55.
A younger retirement age coupled with an increasing life expectancy means that people are now looking at a longer retirement and need to start planning accordingly.
“My motto is set it up in your 30s and make it in your 40s,” Ms Fitzhardinge said.
If your findings are worrying, ASIC advises you to consider opting for a more modest lifestyle.
According to the Association of Superannuation Funds Australia, a comfortable retirement income for a couple can cost about $56,000 a year.
Split super with your spouse
There are benefits to creating superannuation equilibrium within your marriage, although Mr Harper advises that super-splitting requires a certain degree of financial advice before couples take the leap.
Contributing to your non-working or low income-earning spouse’s superannuation may enable you to receive an 18 per cent tax offset on contributions of less than $3000, according to ASIC.
While this is great, don’t rely on it completely.
Ms Fitzhardinge reminds those in their 40s that, unfortunately, this is the age that the divorce rate tends to rise.
Make sure your own super is in good condition and avoid relying completely on your spouse.
If you earn more than $37,000, salary sacrificing can be a good way to grow your retirement nest-egg.
It involves giving up some of your take-home pay (for now, at least) and asking your employer to contribute it to your super instead.
By putting away some of your before-tax earnings, you will be taxed at the special rate of 15 per cent, allowing you to save money in more ways than one.
Reduce your fees
Ms Fitzhardinge recommends assessing your fund every two years to make sure it isn’t costing you too much money and is suitable for your current life stage.
In other words, the fund you contributed to in your 20s may no longer be appropriate now you’re in your 40s.
Evaluate your investments
Educate yourself about where your super is invested, how much risk is involved and whether it’s appropriate for your goals.
Consider investing in other areas too, or buying shares to help spread your risk and increase growth.
If you think it’s too late to invest in property, think again.
Ms Fitzhardinge advises you to seek out like-minded people in a similar situation and partner with them to enter the property market if doing it alone seems intimidating.
Have a Plan B
A lot of careers have a “shelf-life”, according to Ms. Fitzhardinge.
As such, it pays to have a back-up plan.
Choose something that you love, in case you suddenly find yourself without a job and your savings are insufficient to live on.
Maintain your skills and be prepared to consider drastic options like selling the family home or seeking a part-time job.
Preparing for your finacial future is a bit like dealing with an emergency in an aeroplane.
“Put your own mask on before assisting those around you,” Ms Fitzhardinge warned.
Don’t pay other people’s debts when you haven’t dealt with your own.
This means prioritising your mortgage or credit card payments before getting caught up in your kids’ school or university debts.
If this sounds harsh, remember that paying for absolutely everything in your family members’ lives will prevent them from learning important financial planning skills.