Melinda Howe
Preparing for life’s ‘unexpected occurrences’ is a savings priority for many Australians while winning lotto is considered a possible funding strategy for retirement.
According to the latest data from BT Financial Group’s Australian Financial Health Index, Australians’ top savings priority is ‘holidays and travel’ (24 per cent) followed by ‘unexpected occurrences’ (21 per cent).
Although only 18 per cent of Australians identified super as their top savings priority, it ranked higher than saving for children’s education (13 per cent) and a deposit on a house (12 per cent).
Overlay these findings with 16 per cent of Australians aged 18-34 years are hoping to win money, for example lotto, to fund their retirement, and the majority of Australians are putting far too much emphasis on chance to see them into retirement.
In fact, winning lotto to fund retirement is considered a source of funds by:
- 15 per cent of Australians aged 35-54
- 13 per cent of Australians aged 55-64
- 14 per cent of Australians aged 65+
BT’s Melinda Howes, General Manager of Superannuation said Australians’ ‘she’ll be right’ attitude just doesn’t work when it comes to retirement. It doesn’t make sense to financially prioritise ‘maybe’ scenarios over facts and the facts are if you don’t save for retirement and invest early, you will not have enough money to retire.
These findings come despite Australians reporting their financial situations have improved in the past five years. Indeed, a higher proportion of Australians say they have money left over beyond their basic living expenses than in past surveys (58 per cent in 2012 compared to 71 per cent in 2015).
The Index also found a more buoyant attitude to superannuation with an increase in confidence about funding their retirement, from 43 per cent in 2012 to 51 per cent in 2015. However, 26 per cent of Australians say they feel ‘nervous’ and ‘hesitant’ about planning for retirement compared to 21 per cent who feel ‘excited and energised’.
“The research is telling us Australians feel good financially with just over half expecting to have enough money to live comfortably in retirement. Yet the prospect of retirement remains a source of anxiety for many with the majority of under-55’s not confident they’ll have enough money,” said Ms Howes.
“Saving for retirement needs planning and time, two things that will have a significant impact on when and how we retire. Without these, you are truly relying on chance, and nobody really wants that for their financial future” Ms Howes concluded.
BT’s top tips to help you maximise your super:
- Provide your Tax File Number (TFN) – Make sure you are being taxed at the right rate on all your contributions by supplying your TFN to your superannuation fund.
- Find your lost super – You may have more than one super account if you have worked at different companies and for different employers. The AustraliansTaxation Office (ATO) holds this for people, so to check if some of it is yours, simply provide the ATO with your consent and your TFN and they can do a search for you.
- Additional contributions – Employers contribute 9.5 per cent of your salary but the Association of Superannuation Funds of Australia (ASFA) suggests that we should all be saving 12 per cent. There are a number of ways you can contribute to your super, but a bit each month or payday can really add up over the long term. It’s never too early or too late to start, particularly if you are planning to take some time out of the workforce to raise a family.
- Consider combining it – Approximately 45 per cent of Australians have more than one super account. Multiple accounts mean multiple administration fees which directly impact your super balance.
- Review your life insurance – You may have some automatic cover through your super fund, but you need to make sure you have enough. Know what you have and think about how much you might need should your situation change.