Switch to retire rich

It’s a concerning finding… Savings rates have plummeted this year, but according to recent research conducted by Mozo, a financial comparison website, just five per cent of over-55s intend to switch savings accounts in the next six months to get a better deal.

While you want to get an excellent return on your cash savings at every life stage, as you head toward retirement it can become even more important. You should consider all your options carefully to give your savings that extra boost before you retire.

Older savers stuck in a rut

According to the latest Mozo Bank Switching Index, savers aged 55 and over show the lowest switching intentions of any age group.

It’s possible that many older savers are simply not aware of recent entrants in the online savings account market. Some of the options now available, and offering extremely competitive rates. These include market-leading accounts from UBank (owned by NAB) and RAMS (owned by Westpac).

Statistics also say that over-55s are less likely than younger generations to shop around and compare online when it comes to savings accounts. Which is a shame because they could be missing out on some great bargains.

Maximise savings before retirement

Our research also shows that over-55s actually show more inclination to switch credit cards and home loans than they do savings accounts. The majority in this age group have their savings accounts with one of the big four banks, and are unlikely to change this. They’re not as comfortable changing their savings, possibly because this is the most tangible of their assets but a big difference can be made by choosing a better deal.

Heading into retirement means less time for earning, and many people don’t realise that online savings providers are often owned by one of the big four banks  and come with the same government guarantees and protections, plus a higher interest rate.

Beating inflation and tax

If you’re keen enough to snag yourself a better credit card deal, your savings account should be of equal priority. Mozo has calculated that the interest rate you need to be earning on your savings, in order to beat inflation and tax, needs to be at least 3.5 per cent.

Currently, only 25 per cent of ongoing interest rates are above this level, meaning thousands of Australian savers are actually going backwards, and at a time when their income is about to cease.

If you’re approaching retirement, consider all the options open to you when it comes to choosing a savings account. Try comparing and contrasting the different accounts offered not only by the big four banks, but smaller institutions also. Look for a high ongoing interest rate, not just a great introductory special, don’t be afraid to move your money around, and don’t settle for a lower interest rate than you could be getting elsewhere.