Picture this, it’s Friday 28th June, you’re a Financial Planner and you’ve have been doing this for 20 years. Despite your expertise and one of your biggest frustrations is clients that leave things to the last minute, you realise ‘oh sh1t, I have forgotten to make a contribution to my own super’.  Fortunately, you manage to beat the deadline and make the contribution, but not everyone is so lucky.

I have seen different situations in which clients leave things to the last minute.  It could be those looking for advice on whether to make contributions to super before the end of the financial year and having an initial meeting with me in June, even May.  The financial planning process requires multiple meetings, followed by detailed analysis which takes time and is incredibly hard to complete in under 2 months. Secondly, some clients come to see me when they are a few months or years away from retirement and wanting to know if there is anything they can do to ensure they have enough to retire comfortably.  Unfortunately, if there is, there may not be sufficient time to do enough to make a difference.

My general philosophy is ‘better late than never’ and I encourage all to seek advice when the need arises, however I just want to highlight some of the benefits of getting in sooner.

Case study 1: Getting rich slowly

To illustrate a get-rich-slowly approach, take the hypothetical example of a 30-year-old earning $100,000 with a current super balance of $50,000. Let’s call her Jess.

Using the government’s Moneysmart retirement planner calculator, we estimate that if she relies on her employer’s SG payments and makes no additional contributions, she can expect a final retirement balance of $676,330 at age 67. This would provide annual retirement income of $58,086 up to age 92, including a part-Age Pension in later years.

Note: Use the link to the calculator above to check the assumptions used for cost-of-living increases and investment returns. You can alter these to suit.

Age 30, salary $100,000, super balance $50,000, retire at 67

 If Jess were to make a personal tax-deductible contribution of $5,000 per year until she retires, she would end up with a final balance of $918,978 ($242,648 extra) and annual retirement income of $66,414 ($8,328 extra). A welcome gain for minimal pain.

OK, so Jess has managed to put herself in a good financial position, but in my experience, few clients give their super or retirement much thought before they hit their 50s, giving them less time but it is still possible to make up lost ground.

Case study 2: Making up for lost time

Take the example of a 55-year-old with $400,000 in super and a salary of $100,000. Let’s call him Dinesh.

If Dinesh does nothing and relies on his employer’s SG payments alone, he stands to have a retirement super balance of $662,324 at age 67 and annual retirement income of $60,672 until age 92. This puts him a bit ahead of ASFA’s definition of comfortable (annual retirement income of $50,207 and a retirement balance of $595,000), but probably short of his own expectations based on his pre-retirement income.

Age 55, salary $100,000, super balance $400,000, retire at 67

 If he contributes an additional $5,000 a year as Jess is doing, he won’t have a great deal more to show for it once he reaches age 67 (retirement income of $62,487 per year vs $60,324 on SG alone).

Instead, he decides he can afford to make an annual tax-deductible contribution of $15,000 which, combined with his employer’s SG payments of $11,000 per year ($11,500 in 2024-25), takes him close to the concessional contributions cap of $27,500 per year. This will make the most of super’s tax concessions and give him a handy tax deduction on his personal contribution.

Read more about Super Guarantee (SG) contribution rates

The upshot is that his retirement balance should increase to $845,335 (up $183,011 compared with doing nothing). This should provide him with annual retirement income of around $66,484 to age 92 (up $5,812), which is comfortably ahead of the $53,900 suggested by the 70% rule of thumb for someone on his level of pre-retirement income.

What’s interesting to note is that even though Dinesh personally contributes three times the amount that Jess does from age 55, he still ends up with less super.

Planning for retirement is crucial, and it's never too early or too late to start. Whether you're 30 and just beginning to think about your financial future, or 55 and looking to catch up, taking proactive steps now can significantly impact your retirement lifestyle. Remember, the strategies you need will vary depending on your age and circumstances, but the key is to start. Don't wait until the last minute—seek advice today to create a tailored plan that ensures a comfortable and secure retirement.

Book a session today and discover how you can optimise your super contributions for a better retirement. Act now and secure the retirement you deserve!