{"id":32796,"date":"2021-04-25T18:38:41","date_gmt":"2021-04-25T22:38:41","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=32796"},"modified":"2021-04-26T23:19:57","modified_gmt":"2021-04-27T03:19:57","slug":"secure-your-financial-future","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/secure-your-financial-future\/","title":{"rendered":"3 Ways to Secure Your Financial Future"},"content":{"rendered":"\n

What do you want your financial future to look like? What can you do to secure your financial future and ensure yourself a comfortable retirement?<\/p>\n\n\n\n

Being financially secure<\/a> in retirement may be the last thing on your mind if you are in your 30s or 40s. But if you want to retire comfortably, it is important to start thinking of ways to secure your financial future many years in advance. <\/p>\n\n\n\n

Here are three ways you can secure your financial future so you can enjoy a comfortable retirement.<\/p>\n\n\n\n\n\n\n\n

Secure Your Financial Future<\/strong><\/h2>\n\n\n\n

The cost of living keeps rising due to inflation, so you\u2019ll need more<\/em> money to cover the cost of basic expenses in the future. For example, a loaf of bread will cost more when you\u2019re 90 than it does now. With this in mind, it is important to think ahead and plan for the future many years in advance. To secure your financial future and ensure yourself comfortable retirement, consider the following three strategies: <\/p>\n\n\n\n

1) Increase Your Super Contribution<\/strong><\/h3>\n\n\n\n

One of the simplest, surest, and most risk-free ways to secure your financial future is to increase your super contribution. In Australia, the government mandates saving for retirement<\/a> by requiring Australian employers to divert 9.5 percent of each employee\u2019s pay toward their super fund\u2014but this isn\u2019t sufficient for employees to retire on. The average Australian runs out of retirement savings 13 years before they die. <\/strong><\/p>\n\n\n\n

In Australia, call your super to direct more of your income there. Choose one of these approaches, depending on your income situation:<\/p>\n\n\n\n

  1. If you earn more than $52,697, call your super and arrange to pay additional pre-tax money.<\/strong> If you\u2019re under 75 years of age, you can claim a tax deduction for contributing additional funds to your super.<\/li>
  2. If you earn less than $52,697, call your super and ask to contribute some of your after-tax money. <\/strong>The Australian government will pay 50 cents for every after-tax dollar you invest in your super. For example, if you invest $1,000, the government will contribute $500.<\/li>
  3. If you\u2019re self-employed, call your super and arrange to pay 15 percent of your pre-tax dollars. <\/strong>As a self-employed Australian, you\u2019re not required to pay yourself<\/a> super at all, but since you need a retirement plan and it\u2019s one of the best retirement investments out there, it\u2019s a good idea to do it.<\/li><\/ol>\n\n\n\n

    (Shortform note: In U.S. employer-sponsored plans, you can often set or adjust your contribution rate by logging in to the plan\u2019s website. Some employers will match your contribution up to a certain amount.)<\/p>\n\n\n\n

    2) Invest in Shares<\/strong><\/h3>\n\n\n\n

    Investing in shares (stocks) is one of the simplest ways to let your money grow for you with little management. The stock market and superannuations (retirement plans) use compound interest\u2014when your investments earn interest that you then reinvest\u2014to grow your wealth. Some funds will automatically reinvest your dividends, or the twice-yearly payments your fund makes.<\/p>\n\n\n\n

    One of the hardest parts of investing is starting, but it\u2019s worth it in the long run due to compound interest. The sooner you start, the more you\u2019ll earn, as this chart based on an 8 percent annual return shows.<\/p>\n\n\n\n

    Invest \u2192 <\/td>$0\/month<\/td>$100\/month<\/td>$500\/month<\/td>$1,000\/month<\/td><\/tr>
    In 5 years, you\u2019ll have:<\/td>0<\/td>$7,040<\/td>$35,200<\/td>$70,399<\/td><\/tr>
    In 10 years, you\u2019ll have:<\/td>0<\/td>$17,384<\/td>$86,919<\/td>$173,839<\/td><\/tr>
    In 25 years, you\u2019ll have:<\/td>0<\/td>$87,727<\/td>$438,636<\/td>$877,271<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Australians have two options to invest in shares:<\/p>\n\n\n\n

    1. Invest within super. <\/strong>Consider a fund that allows you to choose the shares you invest in without having to pay much in maintenance costs. Along with his HostPlus super, Pape uses a ChoicePlus fund that allows him to invest in shares of Australia\u2019s 300 biggest companies. You need $10,000 to start and must have $2,000 in another HostPlus account. The maintenance fees cost $180 per year.<\/li>
    2. Invest outside of super.<\/strong> You\u2019ll have to use after-tax money. Though investing in shares through super offers a better option from a tax perspective, investing outside of it makes sense if:<\/li><\/ol>\n\n\n\n