How planning ahead can benefit you in retirement

• Work out how much money you need in retirement
• Regularly check your super and get financial advice
• Top up your super

We all know that the COVID-19 pandemic has caused widespread disruption to our lives and for many, that included their retirement plans. Some lost their jobs at a crucial life stage, others were unable to sell businesses that were going to fund their retirement while for some, their ability to save was diminished.

With life slowly returning to normal, ASIC Chief Operating Officer Warren Day joined ABC Melbourne Drive host Raf Epstein to discuss ways to kickstart our retirement plans.

‘The first thing you need to think about is how much you really want when you retire. Have a look at what you’re earning now and – assuming you’re hoping to enjoy a similar lifestyle – you should be aiming to earn two thirds of what your current income is’, Warren said.

‘It’s important to engage with your circumstances, work out how much you spend, do a budget, and consider whether your money is going to last.

‘Your super fund can help you with this. Most funds have their own financial advisers or relationships with advisers to help answer our questions. Don’t be afraid to pay for advice to get a sense check.

‘ASIC’s Moneysmart retirement planner is also a great resource to estimate how much money you’ll have to spend each year once you retire.

‘It seems obvious, but you should check that your employer is making regular contributions. If you don’t know your super fund, ask your employer’, Warren said.

Even if your current priority isn’t saving for retirement, you should be checking your super at least once annually. Consolidating your super, checking what fees you’re paying and choosing the right investment option for your risk tolerance and time frame are just some ways to start.

In many circumstances, compulsory employer contributions to super won’t provide sufficient income for people in retirement. However, Warren said there are things people can do to top up their super, for example by salary sacrificing or making a lump sum contribution, after tax, at a concessional rate.

‘Low income earners may also benefit from making a personal contribution, which the government will match up to $500. That equates to up to a 50 per cent return on your money’, Warren said.

‘Having enough money in retirement requires engaging with your super, reading the paperwork and asking questions about anything you don’t understand.

‘ASIC’s Moneysmart website is a great starting point for information on retirement and super. We’ve actually seen a 12.3% year-on-year increase in visitors to the super and retirement section of Moneysmart. Pleasingly, most visitors in this period have come from the 25-34 year old age group, proving it’s never too early to start planning for retirement.’

ASIC is Australia’s corporate, markets and financial services regulator.