The super hacks that could help you retire early
Entrepreneur and finance educator Vanessa Stoykov shares her superannuation tips that can set you up for early retirement.
Are you only a decade or two into your career and staring down the path of several more before you can even contemplate the thought of retirement? With so many daily expenses and the desire to also treat yourself, it can be easy to put off saving for your future.
However, it's never too early to start moving towards your future goals. So with that in mind, I've compiled a number of superannuation hacks that can help you retire sooner than you might think.
Top up your super as soon as you can
Many people, particularly those in their 20s, feel the future is too far away to worry about. However, if you're hoping to retire early, now is the time to start thinking about it.
If you can start saving in your 20s, it will make it easier to top up your super over a longer period of time. If your 20s are long gone, topping up your super as much as you can now can still help put you in a better position when you're ready to retire.
Put more into your super each month
Putting even 15% of your salary into your super account can help you become much better off down the line. So, anyone who can afford to put more money into their super absolutely should, whether it's through a salary sacrificing arrangement or by making tax-deductible contributions.
The maximum amount you are allowed to contribute to your super at 15% tax is $25,000 per year if you earn less than $250,000 (it jumps to 30% tax after that). As such, putting in as much of your salary as you can to reach that $25,000 cap will set you up for greater comfort and security in the future.
For reference, at the moment, your employer is only required to pay 9.5% of your ordinary earnings into your super. This means you would need to be earning more than $250,000 to reach the $25,000 cap.
Do your research and know your numbers
If you want to retire early, you need to be able to fund an extra 20-25 years without work. To do so you'll need to carefully calculate exactly how much you'll need to fund the kind of lifestyle you'd like to have once you retire.
I have often found it smart and useful in circumstances like this to work backwards. Calculate exactly how much you will need to retire based on the current status of your finances and relative debt level, and then look at how much you need to save each month to achieve this number.
Make some extra income
The wonderful thing about this hack is that the income could come from anywhere. If you have an abundance of items lying around the house, endless racks of old clothing that you never wear or a worn-down car with terrible mileage that has not seen the road in years, sell them and add that money straight into your super account.
Get a side hustle
Instead of calling an Uber, become the driver! Offer to do landscape work for your neighbour, housesit for a colleague, or go the extra mile and deliver food to residents in your neighbourhood. At the end of the day, every dollar counts, and you can add that money straight into your super to top it up even further.
Put any windfalls straight into your super account
Aside from your regular income and side hustles, you should always be taking advantage of a financial "windfall" and use it to bolster your super.
For example, on average, Australians receive $2,500 back from their tax returns. This money is a great way to easily top up your super. The same goes for any inheritance money that you may receive. Use these lump sums of money to set yourself up for the future.
There are a number of strategies and useful tactics to keep in mind that can help you retire early. It just comes down to your willingness to make changes (or even sacrifices) to reach this goal. There is only so much that you truly need to purchase now. Why not save the rest to give yourself the future that you have worked all your life for?
Vanessa Stoykov is a respected finance industry thought leader and the host of new TV show Secrets of the Money Masters (SOMM), which follows some of Australia's biggest sporting celebrities as they are partnered with a professional financial adviser to develop a plan to address their individual financial concerns.
Image credit: Getty Images