Most of us dream of leaving the workplace early. Here’s how you could make that dream a reality.
1. Build your super up
Your super balance is your ticket to an early retirement. The sooner you put money into it, the more time it has to grow – thanks to the multiplying power of compound interest.
Start with a smart strategy like salary sacrifice, where you contribute an extra amount from your before-tax income into your super on top the 9.5% super guarantee. As well as building your super, if you’re paying more than 15% tax on your salary, this strategy could reduce the amount of tax you pay.
2. Change up your investments – but mind the risk
Don’t just add money to your super – make it work harder when it gets there. Your super account’s investment option can significantly affect your retirement savings. For instance, a 45-year-old who has $200,000 in their super and is earning $100,000 could retire at 60 with almost $400,000 if they choose a growth option. The same person would retire with about just over $315,700 – that’s $84,300 less – if they had chosen a conservative option.
But remember, higher growth options are generally more volatile – which means there’s more risk involved. So talk to your adviser about choosing an option that you feel comfortable with, as well as one that suits your age group and retirement goals.
3. Limit debt
A high level of debt can really limit your ability to save now. So aim to reduce your debt as quickly as you can. Make extra repayments on the mortgage, and leave the credit card at home to avoid impulsive buys.
4. Spend wisely now
Finally, see where you can cut back on your spending now. Cancel that gym membership you never use or that pay TV subscription that you rarely watch. Choose cheaper holidays, eat at home more often and stay away from luxury cars. Then put the money you save into your super – and get ready to retire earlier.
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 Calculated using ASIC MoneySmart Superannuation Calculator. The calculation assumes fees and management costs of 1%. Figures are rounded to the next 100.
 You should be aware that there are contribution limits. Extra tax may be payable if you exceed these limits.