I don’t have enough super. What can I do?

What if your super isn’t enough? What if the pension can’t sustain your quality of life? What if you simply don’t have enough to retire at all?

It’s an unpleasant prospect, but for many people it’s all too real. There is rarely a single clear solution, only different degrees of compromise. However, some careful evaluation and guidance could go a long way to help you move forward.

We spoke to Julie French, a financial planner with AustralianSuper, about some of the best first steps when faced with this difficult situation.

Where do I begin?

“The first thing you will need to do is sit down and work out your current situation,” she says. “You will need to say ‘there’s x amount of dollars coming in from income’. That’s from all sources: from investments, from wage, and from any pension you might have from your super account.”

“It’s about assessing where you are and seeing what the next step is.”

You will then need to look at your assets. Many of us are naturally wary of market risk and may have a higher-than-average amount of cash in reserve. If this applies to you, it’s worth asking whether this money could be doing more for you than simply sitting idle.

“That could be very appropriate for your situation,” says Julie, “but it could be adding to the problem, because cash provides a fairly low return, and it’s also taxable if it’s in the bank.”

Next comes the vital step: identifying outgoing expenses.

“I think the really unpleasant answer is that it’s about sitting down, doing those hard numbers, and applying some discipline.

“Let’s say somebody is struggling; they’ve got very low cash reserves; they’ve got a small super account; they don’t have a great deal of income.

“The annual age pension amount for a couple is about $34,000. If they tally up the numbers, they may find they’re spending $55,000 a year. If they don’t have enough super to maintain that level of income, it may come down to dropping back some of the spending where they can – getting rid of the excess that doesn’t really add a lot of value.”

Some people might spend $10 on coffee every week. “Whereas $10 a week post-pension age probably would make a difference in other areas of life. It could mean the difference between sardine sandwiches and something nicer.”

“There are things you can do that might only make minimal differences to your lifestyle, but if it gave you 10% more income, that would be a joy.”

I’ve taken stock of my situation. What comes next?

At this stage, a third-party opinion can deliver a great deal of clarity. And it can help to seek that advice sooner rather than later.

“In situations like this, we would suggest you see an advisor,” says Julie. “An advisor would work hand-in-hand to help you realise what those outcomes are, and what you can do.

“I think the hesitation for many people is cost. But there’s also an opportunity. I sometimes see people and think “if only you’d come in five years earlier!”

What other support is available?

A Transition to Retirement strategy could provide some much-needed breathing space. Click here to learn more about your options.

If you earn less than $50,454 a year, and you’re prepared to put in some money post-tax, the government may also offer some reward. To find out if you are eligible, simply pay a visit to AustralianSuper’s Contribution Calculator.

Ask yourself: what compromises am I willing to make?

“At the end of the day,” says Julie, “we are in charge of our own finances.

“We’re the ones who put our hands in our pockets and pull it out to spend. So there is some control. It’s just dependent on the individual and their circumstances.

“At this stage of life, sometimes we quite rightly start thinking ‘I’ve worked really hard; I don’t want to give up my coffee or my time with friends’.

“I don’t disagree with that, but there has to be some balance. It’s about making sure you can maintain a quality of life in retirement that’s comfortable – whatever that may be for you. “ 

Have you found yourself in this difficult position? What steps have you taken to work through it?

This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788. The views expressed are those of Starts at Sixty and the interviewee, and not necessarily AustralianSuper. For more information, please visit the AustralianSuper website.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.