The difference a decade can make to your retirement savings

tenth anniversary balloon celebrating decade

If you know anything about compound interest, you’ll appreciate that the more years pass, the more your savings build. And when it comes to saving for your retirement and your superannuation, understanding the difference a decade can make, can add up to something significant.

Put simply, the longer your money stays invested, the more potential there is to accumulate wealth. The power of compounding interest is a big part of this because, essentially, you are earning interest on top of interest, over time.

So if you are planning to make additional super contributions to ramp up your retirement lifestyle nest egg, delaying adding money will have a direct impact on the potential benefits of compound interest and how much difference a decade can make to your savings.

In fact, the difference a decade of superannuation contributions may make could be a six-figure bonus (or shortfall!)

Saving in your 50s

If you’re in your 50s, you’ll be making more serious retirement plans to help you get the most out of your superannuation before you start your transition away from working life. Don’t feel you’re there yet? If you used to believe it was too early to start saving for retirement and now you’re feeling you’ve made your financial future difficult, it’s important to realise that, no matter where you are at with your savings, it’s never too late to work harder to improve your situation. That might mean preparing a budget to help you find some more money to put into savings. A decade can make a difference and, although it may not give you that magical retirement figure the media keeps telling you that you must have, anything is better than nothing.

This checklist of superannuation/savings tips for your 50s may help:

  • Review your superannuation with a fine-tooth comb.

Your superannuation was probably set up decades ago, and you may not have reviewed it since. In your 50s, it’s important to review these details to make informed decisions about whether your initial choices are still relevant to your financial situation and ambitions.

Check-in with your financial adviser for the best practice options, depending on your personal circumstances.

How much money you need to retire depends on your golden years’ goals. Travel? A game of golf every day? If you don’t have a firm financial plan to help you get to where you hope to be in retirement, your 50s is a good time to sort it out. 

  • Make voluntary contributions to your superannuation.

One of the simplest ways to make your super work for you is to top it up as much as possible.

Making voluntary contributions to your super can have a huge impact on your retirement finances and comfort levels. Every little bit does help. If you are fortunate enough to have surplus cash flow, your 50s is the ideal time to understand the maximum you can pay in to top up your super – and reap the additional rewards of some tax savings too.

  • Salary sacrifice.

This is where your employer deducts an amount of money from your salary before you pay tax and pays it into your superannuation on your behalf.

If you haven’t been doing much of this already, the time is now.

  • Review your investment strategy.

Now is not the time for big investment risks. In your 50s, you should think about taking a holding pattern approach to your superannuation.

Check in with your financial adviser to see if your superannuation investment choices are suitable for your stage of life.

Are you a spender? This is a time to rein it in. Have a savings account that is separate from both your superannuation savings and everyday savings that is earmarked especially for your retirement.

Saving in your 60s

If you’re still working, your employer will still be paying superannuation guarantee contributions. Currently, that’s 10.5 per cent but legislation will make it rise incrementally to 12 per cent by July 2025.

A transition to retirement strategy matters in your 60s – and that includes understanding how to access your superannuation and keep working in a way that suits you – usually via an income stream.

Most superannuation funds have two income stream products available. One is for people who are moving into retirement gradually, with the second more suited to people who are already retired permanently. Just make sure you have the right information about how these incomes streams work with the Age Pension, so you don’t spend your 70s repaying debt you should not have accrued in your 60s.

Saving in your 70s

If you still haven’t retired completely, this decade is when it will probably happen. It’s the ideal time to get professional advice to help you maximise what you do have, and explore any ways you can still take steps to boost it.

As you look towards some of your biggest financial decisions – downsizing, buying into retirement village living or residential aged care, and perhaps even squeezing in some travel goals, depending on your circumstances – figuring out the best way to work with what you’ve got but still find ways to use other money to boost your retirement savings can still make a big difference. 

And if you have come into some big money – from an investment property that you are ready to sell, some inheritance money from an elderly relative, or the sale of a long-held family business – knowing the best way to make that money work for you can help you look forward to a long and secure financial future.

With the average life expectancy for Australians hovering at 83 years (one of the world’s highest!), learning about the difference a decade can make to your savings –  even if that decade is your 70s – is serious business.

Have you made a decision to ramp up your savings and superannuation with a 10-year plan? What savings tips have worked for you? Share your experiences and stories in the comments section below.

Read more: Saving tips to boost your retirement

Written by Claire Halliday

Claire is an accomplished journalist who has written for leading magazines and newspapers, such as The Sunday Age and Sydney Morning Herald, Australian Women's Weekly, Marie Claire, Rolling Stone, Australian House & Garden, GQ, The Australian, Herald Sun, The Weekly Review, Kidspot.com.au and The Independent on Sunday (UK).

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