Why you should understand how investing works
Let’s face it, we will all retire someday and like death and taxes, it is something you really can’t ignore. That said, if you prepare for retirement, you can control when you retire and how much you retire with.
What is concerning is that according to the Association of Superannuation Funds Australia (ASFA), women retire on average with a balance of $122,848 in super, while men retire with $154,453.
In the Consumer Sentiment Tracker report to March 2021, Finder.com.au shows that there are 24.4 million superannuation accounts in Australia, although only 3 in 4 Australian’s have superannuation, which is less than the number of mobile phone plans Australians hold.
As Finder rightly states, superannuation is crucial to financing your retirement to ensure you can live comfortably, but as they indicate 38 per cent of Australians don't understand how superannuation works, which is alarming given how important it is for our future lifestyle.
When you look at the figures on how much Australians are retiring on, it shines a light on two important areas; firstly, it is easy to see that unless Australians have investments outside of superannuation, there will continue to be a large gap between the lifestyle desired by Australians in retirement and the reality they will experience.
Secondly, it shows a major failure in our systems around educating Australians in financial literacy. Times have changed and all Australian’s need to change with it, which means taking responsibility for their retirement rather than relying on the Government to pay a pension.
For those who are prepared to be a little more active, understanding how superannuation and investing works and the benefits that can be gained from putting in some effort is more than likely to pay off in retirement. The upside is that you get to enjoy a better lifestyle than what would otherwise be possible based on the information reported by ASFA above.