Advice Factory

Why you just need to save more

The most important thing a financial adviser can do for you is help you understand:

• Where you are today financially 
• Your financial goals in dollar and time horizon terms
• Your appetite for risk

For most of us - that is those not considered high net-worth investors - getting a handle on this shouldn't be too complex.

But, what if like most people you are NOT on track to meet your financial goals?

Well, if we take away all the confusing financial terminology - for most of us average Joe's, if you are not on track to meet a goal there are only FOUR things you can do about it!

1. Lower your goal
2. Move the goal date further away
3. Invest more aggressively  in higher risk, higher reward investments
4. Save more

So, if we presume you want to maintain your goals and investing more aggressively scares you (particularly after the 2008 market downturn).

Then the best thing a financial adviser can help you do is work out how to save more!

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Got a question about this article? Click the 'Ask Us' button and send your questions to our team of qualified advice professionals. 

Important Note: Any information or advice in this article does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you before taking any actions.

Will my super be enough to retire on?

One of the biggest questions that everyone has is will my super be enough for when I retire ? The precursor to that question is "How much do I need to retire?" or even more basic "How much does retirement cost?"

Firstly, as a benchmark in 2008 the current maximum age pension for a single person is $546.80 per fortnight or $14,216.80 per annum and for a couple $456.80 per person per fortnight or $23,987.60 per annum. How does that fit with what you spend today ?

How much for a 'moderate' or a 'comfortable' retirement?

The Association of Superannuation Funds of Australia Limited (ASFA) has done some great research on defining what it means to have a 'moderate' and a 'comfortable' retirement lifestyle.

Their analysis done in conjunction with Westpac and called the Westpac ASFA Retirement Standard makes for great reading and defines a modest lifestyle for a single person requires $18,920 per annum and for a couple $26,531. And for a comfortable lifestyle those costs increase to $26,607 for a single person and $48,962 per annum for a couple. (click here for a link to the AFSA site for the full details)

So right now we have a short fall of the maximum pension being as follows:

For a single person the maximum pension covers approximately 75% of the 'modest' lifestyle definition and approximately 53% of the 'comfortable'.

And for a couple the maximum pension is covers approximately 90% of the 'modest' and approximately 49% of the 'comfortable'.

So the big question is how is your super tracking now?

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Got a question about this article? Click the 'Ask Us' button and send your questions to our team of qualified advice professionals. 

Important Note: Any information or advice in this article does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you before taking any actions.

What is Superannuation anyway?

Superannuation is a long term savings and investment plan linked with your working life to ensure that you can have a comfortable retirement. Compulsory superannuation began as a government initiative in the early 90's and, as an employee in Australia, your employer would be contributing an amount of at least 9% of your 'ordinary earnings' into a recognised superannuation plan.

Superannuation is different from normal investment planning because:

• For most Australian employees your employer contributes an amount equal to a minmum of 9% of your ordinary earnings into a super fund of your nomination. This is called the 'Superannuation Guarantee'.
• You generally can't touch the money until you retire.
• There are many tax benefits and government incentives for contributing to your super.

Australia is one of the few countries in the world that have mandatory superannuation contributions as part of government legislation. While most other countries are trying to incentivise their citizens to opt into superannuation, Australia took its medicine in the early 90s.... go us!

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Got a question about this article? Click the 'Ask Us' button and send your questions to our team of qualified advice professionals. 

Important Note: Any information or advice in this article does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you before taking any actions.