Goal setting is visualising an ideal outcome and taking the steps to turn this vision into a reality. We’ve all set ourselves goals at one point or another; pay off the credit card, lose 5kg, stop smoking, run a half-marathon, learn a new language – the list is endless. But have you ever set goals for your super?
Many people cruise through their working life taking their super contributions for granted, assuming that they will have enough. Down the track, it can come as a rude shock to discover that you’ll have nowhere near enough, and by that time it’s often too late to fix. The good news is that there’s an easy fix: the trick is to set some goals, start as early as possible and be consistent. Here are some very simple hints for setting super goals …
Step 1: get motivated!
It all starts with ‘HOW MUCH’: how much will I need for retirement?
To get started, try a little visualisation exercise: visualise your life as a retiree. Think about how you see yourself; how you will spend your days, where you will live (is downsizing or a relocating to another city in the picture?). Do you plan to make any major purchases after retiring (such as paying off your mortgage, doing some home renovations, taking an overseas holiday or buying a new car)?
All of this costs money, and that’s where your super comes in. There’s no hard and fast rule regarding how much you’ll need; however ASFA suggests that the average couple currently needs about $62,000 a year to maintain a comfortable lifestyle in retirement (as opposed to around $40,000 for a modest retirement).
Visualise your future self as a motivation for your present self to put things into motion.
Step 2: look at your super position – identify gaps
Take a look at your super balance to see how much you have right now.
Next, use our Retirement Income calculator to show you how much this will give you at retirement – this is a very handy tool for projecting how much you’ll end up with.
Going back to the ‘how much’ number you came up with in Step 1, compare it to what you’ll actually have using the Retirement Income Calculator – is there a gap between these amounts? If there is, you need to start setting a few goals for yourself to close this gap.
Step 3: create goals and an action plan
Ok, so now you‘ve realised that you need to set a few goals for your super. Start small and be realistic.
For example, a goal could be to start contributing, say, $200 a month into your super. Set up small but regular contributions into your super (that way, your hip pocket won’t even notice). Go back to the Retirement Income calculator and see how contributing this amount will improve your financial position at retirement (you’ll be amazed to see what a difference this could make to your financial position at retirement!).
Remember that there’s no point setting goals if you don’t act on them.
This step is also where a financial planner really adds value; they can help you define your goals and suggest a course of action to help you achieve them.
Step 4: review and tweak your goals as you go along
Saving for retirement is not a ‘set and forget’ formula; check your super contribution and investment strategies once a year or if your circumstances have changed and make any required adjustments. Your Annual Statement is a good opportunity to see how you’ve done over the year and provides a good overview.
Meet with a financial planner to go through your action plan to ensure that it is keeping up with your circumstances.
The information on this page has been issued by Maritime Financial Services Pty Limited (MFS). It contains general information that doesn’t take into account your individual objectives, financial situation or needs. It’s important to consider how appropriate this general information is in relation to your situation before making an investment decision. We recommend that you seek financial advice before making any decisions regarding your super or investments. The information on this page is current at the time of publishing.