Super in your 50s
For many of us, turning 50 is a milestone. It’s also an age where you begin to think about your super a bit more.
Often, your 50s are an ideal time to start considering your retirement plans and how to get the most out of your super while you’re still working. It’s an exciting period, and we’re here to help you navigate it.
Here are our top tips for what you can do with your super in your 50s.
Get to know your super
As you enter your 50s, retirement is fast approaching, or you may want to continue working. Whatever your situation, it helps to be prepared.
With Australia’s life expectancy of 81.2 years for males and 85.3 years for females1, it’s estimated that many of us will spend more than a quarter of our lives in retirement. So, understanding how you’ll fund this chapter of your life is important.
For example, if you intend to retire at age 67 as a single, the Association of Superannuation Funds of Australia (ASFA) estimates you’ll need approximately $46,494 per year to fund a comfortable lifestyle2. If you’re unsure how much super you’ll need to fund your retirement, check out Money Smart’s retirement gap calculator.
Getting the most out of your super is crucial at any life stage, including your 50s. One of the simplest ways to ensure your hard-earned super is working for you, is to consolidate your super. If you have multiple super accounts, you could be paying additional fees and missing out on valuable compound interest.
Generally, it may mean if you make voluntary contributions to your super, that you’ll have a much more comfortable retirement than if you solely rely on the contributions your employer make to your super.
You can add up to $27,5003 of concessional contributions to your account each financial year. Concessional contributions are taxed at 15% if you earn below $250,000 per year. They include:
- Compulsory employer contributions.
- Salary sacrifice payments. Your employer deducts an amount that you nominate from your salary before you pay tax and pays it to your super fund.
- Personal deductible contributions These are payments you can make to your super balance and can be claimed as an income tax deduction. Self-employed people and employees are both able to make these payments.
You can also make up to $110,0003 of non-concessional contributions to your super. These contributions are from your after-tax income and represent a valuable way to boost your super balance. They include:
- Contributions from your after-tax income that you make, or an employer makes on your behalf. As an added win, you could be eligible for a government co-contribution of up to $500 if you make a personal after-tax contribution.
- Spouse contributions. These contributions can be made to increase your spouse’s super balance. If eligible, you may be able to claim a tax offset for this type of contribution.
Importantly, if you’re 60 or over and if eligible, you may be able to use the proceeds of selling your home to make a downsizer contribution of up to $300,000. This is a non-concessional contribution but does not count towards the contribution cap of $110,000.
Review your investment strategy
Ensuring you have an appropriate investment strategy for your age, it is crucial to getting the most out of your super as retirement approaches. Making the time to review and consider how your super is being invested can help to manage experience to volatility and maximise your super during this life stage.
If you’re planning to retire and withdraw funds within the next few years, you might consider adjusting your strategy to put greater emphasis on income generation, limiting your exposure to risk and/or diversification. The best investment strategy depends on your circumstances. If to work out if you are invested in the right way and to help you to better understand risks, returns and spreading your investments. If you do not have a financial adviser, you can request a call back from a Wealth specialist.
Have emergency savings
When you get to your 50s and beyond, you may want to consider having some funds set aside in case you face some unexpected costs. For many, approaching retirement age can also overlap with other life events that make having accessible savings a good idea.
Health issues or employment instability can present significant challenges at this life stage. So, being financially prepared during this period can be highly beneficial.
Everyone’s circumstances are different. And while some may have insurance cover for health issues, an emergency fund can help to reduce the pressure on you or your family if something unexpected occurs.
As many retirees will tell you, life post-work can be an exciting and fulfilling experience. But it’s also important to be prepared. After all, you might have up to 30 years of retirement to fund.
There are a number of ways to prepare for the retirement lifestyle you desire, including:
- Reducing your working hours to part-time
- Consider downsizing your home
- Setting up a Transition to Retirement (TTR) strategy
Once you reach preservation age, a TTR strategy lets you access some of your super while you keep working. Your funds are moved into a super pension, allowing you to withdraw between 4% and 10% of your pension account balance each financial year.
Your 50s is a good time to understand what the rest of your career and retirement will look like. If you have a financial adviser, they can help you understand what strategies are available and what may suit your individual circumstance. Alternatively, you can request a call back from one of our wealth specialists who can provide you with free general advice to get you started.
If you would like to discuss your retirement plans, you can request a call back from one of our wealth specialists.
For more handy articles, visit our Education HUB.
Planning for retirement
You may have an idea of what you want to do once you retire from the workforce. But have you considered how much income you will need to fund your retirement? With a little planning today, you can be financially prepared for retirement.
When can I access my super
Super is a long-term investment, however there are certain circumstances that may allow you to access all or part of your super before retirement.
What should I do with my super in retirement?
Retirement means different things to different people. So how you decide to use the retirement savings you’ve worked so hard for, comes down to your personal preference and circumstances.
Things you should know
Bendigo Superannuation Pty Ltd ABN 23 644 620 128 AFSL 534006 (Bendigo Super) is the trustee and issuer of Bendigo SmartStart Super and Bendigo SmartStart Pension (products). Bendigo Super is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879 (Bank). Each of these companies receives remuneration on the issue of the products or services they provide, full details of which are contained in the relevant Product Disclosure Statement (PDS). Bendigo Super, the Bank and its related entities do not guarantee the repayment of capital invested, the payment of income or products’ investment performance. An investment in these products does not represent a deposit with, or liability of Bendigo Super, the Bank or its related entities. The Bank does not stand behind or guarantee the performance of Bendigo Super in its capacity as trustee and issuer of the products. Bendigo Super is not an authorised deposit-taking institution within the meaning of the Banking Act 1959.
Information on the website is subject to change without notice. Any advice in relation to superannuation is provided by Bendigo Super. The information contains general advice only and does not take into account your personal objectives, situation or needs. Before making an investment decision in relation to these products you should consider your situation and read the relevant PDS accessible through this site.