How to boost your super by giving up the little things

The news out this week that increasing numbers of Australians are opting to work after 70 comes as little surprise to experts in the superannuation industry who have been jumping up and down for years about the significant shortcomings in retirement savings plans.

The difference now is that as baby boomers inch nearer to their retirement date, many are finally coming to terms with the fact that they just won't have the funds to support their lifestyle.

The thing is, most Australians aren't aiming to retire on a luxury yacht and cruise around the Mediterranean in their twilight years. They're just looking for enough cash to cover the bills, three meals a day and a couple of treats here and there for the grandkids.

The expectation that your super and/or the government will look after you in retirement is fast disappearing as each year - and each federal budget - passes. The emerging truth is that a lifetime of hard work is no longer enough to keep most of us afloat without making extra contributions to our super.

Last November, Roy Morgan found that Australians are retiring with a median super balance of $207,950, which works out to be just over $10,000 a year over 20 years or only $28 a day.

Of course, the absolute last thing people in their twenties are thinking about is putting money aside for retirement in 40 or 50 years.

However, it's actually the best time to set up a regular direct debit that squirrels away $20 or $30 a month, before the mortgage and the kids starting pick-pocketing your wallet.

RateCity.com.au analysis of Australian Securities and Investments Commission data shows that even the smallest contributions can make a difference over a lifetime of regular payments and compounding interest.

For example, forgoing a coffee a week can add up to over $12,000 in retirement, while skipping a dinner out a month totals over $70,000 in retirement, based on a 30-year-old earning $80,000.

These small early sacrifices really can make a difference at the tail end of your working life, when at 65 you're either looking down the barrel of another 10 years' work or putting your pen down and taking up that luxury cruise you've always dreamed of.

Get stories like this in our newsletters.