Superannuation? - Uh Uh, You Need To Invest!

Why do you need to invest in creating your own superannuation?

Because you want to avoid at all costs the Government pension or false reliance on compulsory superannuation which is drastically under funded. Yes like everybody, you are going to retire some day be it at 50 years of age or 80 years of age.

And unfortunately for all of us, nature takes its course and you become less and less employable and more easily tired.

Gardening, fishing and daytime TV seem to become more attractive. There comes a time to take it easy.

If you are 45 and retire in 20 years time at 65 years old, you can expect to live an average of about 15 years without a job. If you are younger than this, you will live even longer without a job because life expectancy is increasing all the time.

How much money do you need if you haven’t got a job? It is important to know how much you want financially to be able to effectively plan your retirement.

Your retirement income could come from three sources:

1. The Government pension

2. Your compulsory Superannuation Guarantee Contributions

3. Your voluntary investments

Forget about the pain of retiring on a Government pension. Any payment that you do get will be subject to an income and assets test and what little you do qualify for can be further reduced with a variety of other clauses. Visit the center link web site to see just how little you'll receive on the government pension (opens in a new window)

And forget about thinking that you compulsory Superanation Guarantee contributions will let you retire in the lap of luxury.

A Review Of Australia's Compulsory Superannuation Scheme (opens in a new window)- After A Decade and the inadequecies that would seem to be relavent to anyone that is wanting to rely on it startling to say the least.

VOLUNTARY INVESTMENTS must be where it is at if you are to retire in any sort of comfort.

Yes I cover this and much more in my book in the chapter titled, 'Why Invest'. Take a quick look at what's covered and you'll see that I not only look at Why Invest per-say, but I take a look at your options as a wage earner, and your future at a glance is also revealed. (Calculate your numbers... if your like the majority of Australians it's going to hurt!)

So in essence, you need to invest because when asked, most people want to retire on 75% of their current income.

Frankly the govenment pension and for most part superannuation will not cover you.

The average Australian male income is $44,000 before tax. So on average, we optimistically hope for $33,000 before tax in retirement from our super. This obviously relies on the size of your lump sum and percentage return achieved.

The following invested figures will achieve $33,000 income:

$660,000 at 5% return

$440,000 at 7.5% return

$330,000 at 10% return

$264,000 at 12.5% return

$220,000 at 15% return

Achieving double-digit returns on an invested lump sum over the long term through any investment vehicle is fanciful.

By the way is the govenment pension or your superannuation fund looking anywhere near being enough?

Can you invest in voluntary investments like residential property and achieve double-digit returns. Absolutely, but knowledge is the key because the mechanics of it is easy.

Let me just cover off on any security that you may have in superanuation.

If you are 25 years old now, it is projected that paying the Superannuation Guarantee for 40 years on an inflation-indexed income of $44,000 now, would produce a payout after inflation of about $170,000 then. You may think that topping up your superannuation with extra voluntary contributions now will bridge the gap and return you the desired $33,000 income.

However, after 40 years at 3% inflation in wages and living costs, the buying power of $33,000 then will be about $11,000 in today’s dollar terms. This is remarkably close to today’s pension figure, why bother!

Please realise that that most superannuation funds will not create sufficient income for retirement. You would need to add more than twice the amount of the Superannuation Guarantee payments in voluntary contributions to achieve the equivalent of $33,000 when you retire. If you achieved this, the years of retirement would then eat into the buying power of this fixed income.

Need I say more about the govenment pension or your superannuation fund?

But you earn a high-income you say. Will that save you?

Let's look at what happens to most peoples income irrespective of what income they are on. You'll hopefully contribute 9% of your wage to superannuation. (Superannuation is not bad, its just that the average workers supperannuation just is not enough to cover for any sort of decent, deserving lifestyle in retirment).

Anyway, your income, hopefully a fair proportion goes to the house that you must live in, and you can bet that with no investment deductions a big proportion will go to the Australian Tax Office. Then come the necessary living and schooling fees, and the rest I will bet a house on will go to a consumer lifestyle.

Savings? Even if you are different to most of the population and are a regular saver, will your savings be enough? Let's take a look at a quick look at a savings verses an investment example

Simply if you don't plan an investment strategy, you'll very quickly end up like 85% of the population in retirment.

Yep on the pension far too early. Very quickly you too will be dependant and financially uncomfortable regardless of the income you earned while working.

You also need to realise that building a large enough nest egg is only half the solution. Your nest egg return needs to outperform the effects of inflation!

I have shown that most superannuation funds will not adequately fund retirement now, and can guarantee that the government pension will get worse in the future.

This web site reveals how you can avoid the government pension and any reliance on supperannuation by creating passive wealth for a self-funded retirement through leveraged capital growth of investment property.

This will reduce your tax through “gearing” and transfer it into your investments. Tax reduction plus rental income plus some small funding from your consumer lifestyle will enable you to build wealth with very little strain on your budget. In fact, we work through the figures of property investment and expose many mysteries that preoccupy too many people.

Please realise the danger in avoiding your own retirement investment planning , no matter what your income is! Should you miss your opportunity now, you will pay for it with years of financial discomfort later.

You can of course wish and hope what you want, but the reality, according to a leading insurance company, and what one could call The Law of Life, says that of 100 people aged 15 years today, by the time they reach 65 years:

• ONE will be rich

• FOUR will be financially independent

• FIVE will still be working

• TWENTY-FOUR will be dead

• TWELVE will be broke

• FIFTY-FOUR will be dependant on the Government or charity for financial support

Yes only 5% will retire at 65 on a self-funded income. Sadly and surprisingly only ONE percent will retire wealthy!

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