Anthony 23 years
Record store assistant
Superannuation not on radar
Why would I worry about what Im doing in 50 years?
If Anthony retires at age 65 and adds his own 3 per cent from age 25 to his compulsory super savings, his retirement standard of living will be 25 per cent higher.
Anthony lives in a flat in one of the hip fringe suburbs of a major capital city. He works in a record store as music is his passion. He collects vinyl records and goes to gigs a few times a week. Anthony earns $660 a week but theres not much left over after pay day and thinking about how hell live when he is 70 is just not on the radar. Anthonys boss pays a 9 per cent superannuation contribution into his super fund.
If Anthony retires at age 65 after being employed his whole working life, the culmination of that 9 per cent compulsory contribution will allow him to enjoy a standard of living that is only 8 per cent lower than it was before he retired.
However, if he was to retire or be retrenched at 55, or take time out for study, travel or to have a family, he would experience a standard of living in retirement at least 20 per cent lower than his average pre-retirement living standard level.
If Anthony decides to contribute 3 per cent ($20 a week currently) from his after-tax income in addition to his employer's compulsory 9 per cent contribution, he could grow his retirement savings considerably. By making his own contributions, Anthony qualifies for the Government co-contribution, where the Government contributes $1.50 for every dollar Anthony contributes. Thats an extra $1,232 a year on top of his contribution. By putting away a small amount each week, his standard of living in retirement would be 20 per cent higher than his average pre-retirement living standard level.
