Whether you’re close to retiring or imagining a life of leisure in the distant future, it makes sense to ensure your funds will go the distance. However, there are a few ways to boost your financial position and make sure your retirement dollar will allow you the freedom you want.
1. Pay debt first
Loans against assets you may have are as important to pay off as making savings. Think of paying off a home loan with a 7 per cent interest rate as a way of making a guaranteed 7 per cent on your money. Once you are paid up, any remaining funds can be invested into savings and your self-managed super fund (SMSF).
2. Consolidate any existing super
You could be paying higher fees simply because you have various super funds from previous years. RaboDirect can have any existing super rolled over into a RaboDirect Online SMSF account. Simply tick the rolloverÂ box on your application form or give us a call.
3. Start now
It’s more about getting started than the end goal, but small contributions make a big difference. Set a minimum percentage of your weekly earnings as extra contributions. However, if certain weeks allow for more, send those extra savings down retirement lane.
4. Set general goals, not end points
Work out what income you are likely to have when you retire and what percentage of your current salary is sufficient. While retirement savings goals are valuable, the “I thought I would have X amount by now” attitude won’t help. Start your plan and stick to automatic savings to achieve your retirement dreams, even in fluctuating markets.
5. Make it a habit
Old habits die hard, and if saving money doesn’t come naturally, then going online can set new practices in motion. Set up automatic direct deposits into a high-yielding online retirement account and make your new commitment count.
6. Do your research
Whether it’s making purchases or choosing banking solutions, keep informed about the true cost of items and services. Take the savings you make from finding a cheaper deal and put them straight into your high interest account.
7. Use tax breaks to your advantage
Depending on your level of income, it may be beneficial to make before-tax contributions to your retirement savings. Once you start paying more than 15c to the dollar in tax, super can be an attractive way to make tax savings. For those with wealth in assets, before-tax contributions may also offset nasty capital gains tax bills. If in doubt, seek professional tax advice.
8. Supply your TFN to your Super fund
Providing your tax file number to your Super fund could be the easiest saving you ever make. If you haven’t done this, your before-tax contributions will be penalised, and you can’t make after-tax additions. If in doubt, seek professional tax advice.
All those eggs in one basket are a bad idea, and the same rules apply to your nest egg. If you’re close to retirement, your SMSF might allow you to direct money into the most conservative and stable areas for peace of mind.
10. Seek professional advice
There are many professionals who offer advice on retirement savings and SMSFs. They can help with the requirements and costs of getting started and look out for investment options and risks. They can also help you run your fund and advise what is right for you. RaboDirect can help you on getting started with a RaboDirect Online SMSF account with up to 5.60 per cent variable interest.
Get retirement financial planning advice for the future with the Financial Planning Association of Australia
Checking these few savings tips can help everyone, from early achievers to late starters, maximise their retirement dollar. Take control of your financial habits now and forget the worries later in life.