Your fifties can be crunch time for your retirement savings

The fifties are often a hard time for people. Many find themselves squeezed between significant workplace demands, pressures brought by young adult children still living at home and possible difficult divorces all while slogging through the final years of paying off their home.

Yet your fifties are potentially your last ten or so years in paid employment and so are important years for building up superannuation balances and setting yourself up for retirement.

Here's why:

• Increased earning potential

Many people reach their peak earning years during their fifties, allowing for larger contributions to super and the possibility of reducing your overall tax bill by putting in place super salary sacrifice arrangements. If you don’t know what this is, speak to your tax agent today.

• Time for compounding

While there are fewer years left until retirement, the potential for compounding interest on your super balance is still strong, especially with larger contributions. This is the so-called snow-ball effect, where earnings build on earnings.

• Review and adjustment

By now you should have a good idea of what sort of retirement you are hoping for. Where you will live, how much you will have. So, the fifties are a good time to review your superannuation strategy, including your investment options and contribution levels, to ensure you're on track to achieve your retirement goals. 

• Tax advantages

Salary sacrificing or asking your employer to make extra super contributions before tax is deducted from your earnings, is a clever way to boost your super, as these contributions are generally taxed at a lower rate than your usual income tax and so reduce your overall tax bill.

• Catch-up contributions:

If you haven't been able to contribute as much as you'd like earlier in life, your fifties may allow for catch-up contributions through carry-forward rules or other strategies. These are very complex and so again, if you don’t know whether you are eligible, ask your tax agent.

• Retirement readiness:

By actively managing your super in your fifties, you can increase your chances of achieving a comfortable retirement. Part of this is deciding whether you really want to stay in your family home or whether you should plan to sell and make a downsizer contribution to super. This one step can completely change your financial position in retirement.

So, if you are in your fifties and you are now starting to think, yes I really need to start boosting my super contributions today, speak to me as to the best way of doing so.