Anyone who’s been watching Game of Thrones lately knows the importance of setting strategies.
No matter your stage in life or whether your aspirations are huge or modest, a strategy (or several of them, as the case is with the constantly scheming characters in GoT) is what will help you get there. And if there’s one thing everyone has in common it’s the fact that we all need to plan for those golden years of retirement.
Here are five strategies you can employ to reach you retirement savings goals.
1. The tortoise
Right up there with The Ugly Duckling, the Tortoise and the Hare is one of the many kids’ stories told to educate us under the guise of entertaining us. While slow, the tortoise ultimately wins a race most would have expected him to lose. Why? Persistence and forward motion.
Many people will adopt a tortoise strategy to approach their retirement goals. To do this, you only need to start, but you need to start as early as possible.
Begin by checking to see if you have already acquired a super balance through your concessional contributions. These are deposits made into your superannuation account from your pre-tax wages, your super guarantee contributions (SGC) from your employer or other sources.
Next check to see how much is going into this account every payday from your own wages and from your employer. As you upskill and move through your career, you may have a larger earning potential, which means this figure may rise. These contributions are the minimum you can make, which is how payday by payday, the tortoise wins the race.
One good way to help slowly build your superfund over time is by talking to your employer about making a salary sacrifice. This is where you boost the amount coming out of your pre-tax wages to add to your savings. Find out more about building your super through a salary sacrifice on the Virgin Super website. Even if it’s only a little extra each week, this forward motion is the strongest skill in any tortoise’s arsenal and may make all the difference at the finish line.
When making salary sacrifice contributions, you should be aware of your concessional contributions cap. Speak to your accountant about the concessional contributions cap, and find more information on the ATO website.
2. The hare
In the classic fable, the hare has all the potential in the world to race to the finish line – but doesn’t. The hare gets complacent, takes a break, and loses the race, but most importantly, doesn’t make it to the end.
As a strategy for retirement, the hare may not suit everyone. The hare would spend much less time saving for retirement, saving larger sums of money every month in a shorter time. If you have left your retirement savings to later in life or need to boost your savings in a flash, a hare strategy could help.
A large salary sacrifice may be able to help more than simply saving as much as you can from your take home pay. Again, when making salary sacrifice contributions, you should be aware of your concessional contributions cap. Speak to your accountant about the concessional contributions cap, and find more information on the ATO website.
3. The investor
Put on your best Wall Street suit and consider how you can better manage your existing superannuation savings through wise investment.
After all, your superannuation fund is in fact an investment. By sinking this money into various portfolios, you may be able to garner interest over time and essentially grow your funds. But before you panic about not knowing your bulls from your bears, remember you don’t have to do this alone.
Some accounts, such as Virgin Super Essentials, does the hard yakka for you. Lifestage Tracker® keeps an eye on your account, automatically adjusting how your super is invested as you age. This is a balanced investment option and may suit people who want their super to match their life stage, but who don’t want to actively manage their fund.
Virgin Super Plus could be the wiser choice if you are savvy enough and keen to manage your own superfund investments. With Mix & Match, you can adjust your portfolio around certain parameters, switching up where the funds are placed within Australian and international shares, property, cash and fixed interest, and an aggressive or balanced Lifestage Tracker ® plan.
Another route is to opt for a self-managed super fund (SMSF). You’ll not only be responsible for deciding on where and how to invest your funds, but also complying with all taxes and laws on super. This option is generally considered best only for those who really know what they’re doing and have the time to spend on dealing with their fund – you can read more about SMSFs on the Australian Taxation Office's website.
4. The spare
One of the sure signs of growing up is that you have money leftover at the end of each pay cycle.
It might not be a lot, it might not even break double digits, but whatever it is, it could do a lot more good accruing compound interest than sitting in your bank account. This is one strategy to grow your superfund that won’t pinch when it comes to the budget, but may make a real difference further down the line.
Make a habit of making this payment each payday. Even if it only averages $20 a month for the next 50 years, that will still add more than $10,000 to your final balance – plus interest!
5. The umbrella
Sometimes, one of the best offences is a good defence. An umbrella strategy can be a good addition to other strategies in that it means you will be prepared for rainy days.
An umbrella strategy is one in which you have savings set aside outside of your current superannuation fund. For those moments when your car needs a new set of tyres at the same time as you have to replace the washing machine that blew up outside of its warranty, your rainy day fund will cover the costs. The point being that such out-of-the-blue expenses don’t interfere with the money you set aside for your superfund. Once it builds over certain amount, you can always transfer a portion into your Super to help your savings on all fronts.
What’s your strategy to reach your retirement goals?