Friday, 28 September 2012

When Is The Best Time To Start Saving For Retirement?

Well, my answer is always “yesterday”. Yet I’m very aware that the reality of saving for your future is never so simple. What you really need when making decisions about your superannuation contributions, instead of a date by which you should have started saving, is clear guidance based on your particular circumstances.

An excellent article by Christopher Niesche published in the Sydney Morning Herald in August, focused on the recent reduction to $25,000 of the concessional superannuation cap. Contribute more than this amount to your super fund under the concessional cap in any year and an additional tax will be payable.

Niesche asked a series of experts from ING, BFG Financial Services and ANZ on their view of the impact of this change. While they all agreed this reduction should bring forward most people’s plans to contribute to their super, it was not entirely clear when the optimal time was for individuals to start bumping up their super contributions.

To me, the big question raised (yet not answered) by this article is: At what age and life stage is it more prudent in the long run to increase super contributions rather than paying off the mortgage, and vice versa?

And before you put this question into the ‘too hard basket’ I’m pleased to advise that as part of our Personal Ontrack program, we do have software designed to provide you with an accurate and actionable answer to the question.

The program determines whether your money is better off being invested in super, or paid off your mortgage, or simply saved by taking into account your age, tax bracket, mortgage rates and potential investment returns and other parameters unique to you.

By giving you a clear recommendation on when your super contributions need to increase, based on your individual situation, Personal Ontrack can help you make wise and informed decisions regarding your future.

Take the guesswork out of your superannuation plans and contact me, or one of my team to discover more about putting certainty into your financial future.