If you are looking at your income needs and are worried that you may not have enough money for a comfortable retirement, the good news is that you can still take steps to hit your super savings as you approach retirement.
We share below some tips and insights to consider in your 20s, 30s, 40s, and 50s.
20s: Start saving a percentage of your income and let it compound over time
In your 20s, the key is to save as much as you can on a regular basis. It is when you’ll have the least amount of expenses, especially when you get to your mid-20s and you start making real money.
It is suggested to have a certain amount (at least 20 per cent) automatically deducted from your paycheque. If you invest your savings in a retirement account or elsewhere, you’ll be taking advantage of compound interest.
Saving early on is a staple to building wealth.
30s: Resist living a lifestyle you can’t afford
This is the decade when you start spending more as you earn more. Also, life can get more expensive as people get married, buy a home or have kids.
The key in the 30s is to avoid living a lifestyle you can’t afford to prevent yourself from making big financial mistakes that carry into the next decade.
Keeping up or increasing the savings pattern you started in your 20s is ideal. You need to be vigilant about saving for your future and participating in family budget and investment decisions.
40s: Focus on growing your income for retirement
Your 40s are the time to focus on earning. You may consider hiring people that do things for you so you can focus on your career and extending your income and benefits for you.
As you continue to grow your income, continue to save a percentage for retirement and into other accounts. It is recommended to save a minimum of 15 per cent of your gross income, although 20 per cent would be optimal.
50s: Stay on track for your retirement plan
This is your last decade before retirement so it’s the time to make last adjustments. It is important to find out what retirement is looking like and contribute more to your retirement accounts.
Also, it’s the moment to transmit all your knowledge to your family and/or friends about how to make financial decisions and to teach your children money skills. The key is to provide financial education and let your adult children become financially independent. This is the time to put your retirement goals in clear focus and make it a priority.
In order to hit your retirement savings and ensure that your pension incomes are sufficient to cover your needs, you need to know what you’re spending and what you’ll need in retirement.
Sources:
[1] Financial Review (2019), Want to retire with $1 million? This is what to do in your 20s, 30s, 40s and 50s, https://www.afr.com/personal-finance/what-to-do-in-your-20s-30s-40s-and-50s-to-retire-with-1-million-20190129-h1al6i
[1] The Sydney Morning Herald (2019), What to do in your 20s, 30s, 40s and 50s to retire https://www.smh.com.au/business/markets/what-to-do-in-your-20s-30s-40s-and-50s-to-retire-with-1-million-20190128-p50u1e.html
