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Should I save 10% and also voluntarily contribute to my super?

Q. “I read this week’s article with interest particularly the part where the author advised saving 10% of one’s salary in a high interest account.  Do you recommend this as well as salary sacrificing into super (I already sacrifice 10% of my annual salary into super)? What ratios would you recommend for different types of savings, ie emergency buffer vs saving for medium and long term goals vs saving for retirement?” Helen

Answer

Hi Helen – Thanks for your question and well done on saving 10% of your salary to super – AWESOME EFFORT! I assume this is in addition to the 9% superannuation guarantee, so that’s fantastic and a really tax effective way to save for the long term and/or retirement.

When we talk about saving and investment a critical element is the timeframe you have. Using a high-interest bank account for saving is great for putting money aside for short-term expenses or emergency funds. We usually suggest having savings equivalent to around three months’ salary (six months is even better but usually pretty difficult). So you could save 10% of your salary ON TOP OF the super contributions until you reach this target. For example, if your monthly income was $4,000, then you need to save around $12,000 to give you a really comfortable buffer. If you are only saving 10% of your income toward this goal, it’s going to take a while to get there.

There’s no hard and fast rule on different amounts/ratios to save for different time frames. We find it better to focus on the dollar amount you need or the lump sum. If you’re saving for a wedding in three years’ time, you usually know how much it will be, so that’s your target.

Remember the earlier you start, the easier it is in the long run. If you’re in your 20s and saving 10% of income for retirement then you are much more likely to reach your goal. If you are in your 50s and just starting to save for retirement then you may need to save more than 10% of your income.

If in doubt, check it out with a qualified financial planner and good luck!

Answer by: Anne Graham

Anne Graham is an Authorised Representative and Credit Representative of Securitor Financial Group AFSL & ACL 240687

Disclaimer:
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Q. “I read this week’s article with interest particularly the part where the author advised saving 10% of one’s salary in a high interest account.  Do you recommend this as well as salary sacrificing into super (I already sacrifice 10% of my annual salary into super)? What ratios would you recommend for different types of savings, ie emergency buffer vs saving for medium and long term goals vs saving for retirement?” Helen

Answer

Hi Helen – Thanks for your question and well done on saving 10% of your salary to super – AWESOME EFFORT! I assume this is in addition to the 9% superannuation guarantee, so that’s fantastic and a really tax effective way to save for the long term and/or retirement.

When we talk about saving and investment a critical element is the timeframe you have. Using a high-interest bank account for saving is great for putting money aside for short-term expenses or emergency funds. We usually suggest having savings equivalent to around three months’ salary (six months is even better but usually pretty difficult). So you could save 10% of your salary ON TOP OF the super contributions until you reach this target. For example, if your monthly income was $4,000, then you need to save around $12,000 to give you a really comfortable buffer. If you are only saving 10% of your income toward this goal, it’s going to take a while to get there.

There’s no hard and fast rule on different amounts/ratios to save for different time frames. We find it better to focus on the dollar amount you need or the lump sum. If you’re saving for a wedding in three years’ time, you usually know how much it will be, so that’s your target.

Remember the earlier you start, the easier it is in the long run. If you’re in your 20s and saving 10% of income for retirement then you are much more likely to reach your goal. If you are in your 50s and just starting to save for retirement then you may need to save more than 10% of your income.

If in doubt, check it out with a qualified financial planner and good luck!

Answer by: Anne Graham

Anne Graham is an Authorised Representative and Credit Representative of Securitor Financial Group AFSL & ACL 240687

Disclaimer:
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.