Four ways to make more retirement hay while the sun shines

The latest AMP.NATSEM report, Going the distance: Working longer, living healthier, has found that although the pension age may rise to 70 if the Government’s proposed legislation passes, many people in their 60s simply aren’t going to be healthy enough to work that long.

The report found that in 2035 one in four men and one in five women aged 60-69 are expected to assess their health as ‘fair’ or ‘poor’ – and you can bet the chances of them working will be slim.

In fact, it’s predicted that less than one in three men and less than one in seven women with fair or poor health are likely to be employed.

So, how can these people save enough money now, when they are healthy, to self-fund an earlier retirement down the track?

Here’s our essential guide to the retirement planning galaxy:

Know how much you need to live on in retirement and put a plan in place

How much money will you need each month when you retire?

To work it out quickly, just visit the ‘What’s my number?’ calculator here:  and you can see how much you’re likely to need in retirement, how much you’re likely to have when you retire and if there’s any shortfall. Many of us will have a gap – so don’t stress if you do.

Once you know your position, you can take steps to improve it.  A financial adviser can help you do this in ways that suit you and your life and help create a workable and tailored plan.

Make the most of salary sacrifice

Not all employers offer salary sacrificing but those who do offer a great retirement saving benefit to their staff.

Salary sacrifice is an arrangement whereby, with your permission, your employer puts a certain portion of your earnings each pay directly into your superannuation before that money is taxed.  As well as adding to your super balance, this also effectively reduces your taxable income. Limits do apply so it’s important to get some good advice here. 

Make extra contributions into super

Even if you can’t salary sacrifice, you can still consider making personal contributions into super.

Making extra contributions will help boost your nest egg.  Remind yourself that by working and saving hard now you’ll reap the rewards down the track when you’re no longer able to work.

Review your asset allocation in super and check how you’re invested

Think back to the investment allocation box you ticked on your super forms – or call your fund to check if you’re invested in an age-appropriate way.

If you ticked balanced or conservative and you still have 20+ years to work, you could potentially miss out on earning thousands of dollars long-term.  Of course, as you get closer to retirement, you may want to become more conservative with the way your super is invested.

By getting pro-active as soon as possible with your super savings, you can avoid financial stress in your golden years, at a time when your health may not allow you to work.

Remember that it’s a wise decision to make as much retirement hay as you can while your working sun still shines.

By AMP financial adviser Richard Bejah CFP®
 * Richard Bejah of FinancialPartners (Tas) Pty Ltd are authorised representatives and credit representatives of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee