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Retirement

When to start saving for retirement

  • February 17 2020
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Retirement

When to start saving for retirement

By Louise Chan
February 17 2020

Planning early for retirement can help you identify your retirement goals and the steps you need to take in order to make it happen. 

When to start saving for retirement

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  • February 17 2020
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For many, this means maximising super contributions whenever there’s extra income, but this may not always be the best thing to do.

When asked for recommendations on what a person should do with a windfall, most experts don’t immediately suggest topping up super.

In fact, the most recommended thing to do is either to pay off debts or build an emergency fund before saving up for retirement.

Average super balances

Data from the Australian Bureau of Statistics (ABS) revealed that the average superannuation balance of people 15 years old and over have improved over the last few years.

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In financial year (FY) 2015-16, the average balances of this particular demographic was $158,700 for men and $105,400 for women.

ABS figures showed at least a $10,000 increase in FY 2017-18, with average balances of $168,500 for men and $121,300 for women.

The improvement in super balances may have been the combined result of people growing more conscious over their financial independence in retirement and changes to the super law.

ABS likewise revealed that the improvement in super balances, among other economic factors, assisted in driving the average household wealth to pass the $1 million mark in FY 2017–18.

Relying on the 9.5 per cent super guarantee from your employer may not be the fastest way to save up for retirement, but you may lose more money from debts or if an emergency occurs.

It may be ideal to max out your super contributions but, if you have existing debts or have no emergency savings, it’s best to address your potential financial liabilities first.

Pay debts or build an emergency fund: which is more important?

You may choose to pay down your debt or start building an emergency fund – it depends on your personal circumstances.

If you have high-interest debt that can balloon quickly, such as credit card debt or a payday loan, it’s highly recommended to pay down your debts first. 

Paying off debts doesn’t necessarily include long-term debts like mortgage or car loans, but you may make additional repayments to lower your balance if you have extra money.

However, if you don’t have short-term high-interest debts that could compromise your financial position, consider building an emergency fund before focusing on your retirement nest egg.

Building an emergency fund can ensure that it won’t be necessary to use your personal savings or access your super in the event that your income-producing activities are interrupted.


Explore nestegg to learn different ways to save for retirement.

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About the author

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Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

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