With Australians living longer than ever before the importance of saving money for retirement has never been more crucial. Yet millions of Australians will retire with barely enough superannuation to cover their needs for more than a few years.
Super expert Nidal Danoun says it’s not too late to avoid slipping through the cracks and he encourage small businesses and sole traders to invest in their super now!
“I fear for sole traders and small businesses,” he tells Kochie’s Business Builders (KBB). “Cash flow is always an issue but I can’t stress enough the importance of super.
“Let’s take a step back and realise superannuation is now the main retirement vehicle. Since 1992 when the government introduced the compulsory superannuation system there has been a growing pressure on super to provide the bulk of people’s retirement funds. There is a need for a reduced reliance on the government’s aged pension,” he says.
“In coming years, we will have an ageing population putting further pressure on this [the pension] – plus there is also another factor: that a pension is a safety net and people need more to retire on than a pension gives them.”
According to Danoun, longevity is becoming a big risk factor even for those of us that have been diligently contributing to our super funds for decades.
“We are all living so much longer. Nowadays they suggest you need between 60-70 percent of your pre-retirement income to retire comfortably.”
According to Danoun we need to start taking our retirement savings seriously.
Danoun says to encourage people to save more towards their super, the government has enabled a number of concessions.
“Since July 2017 you don’t need to be self-employed to make a deductable contribution to super- employees can make deductible contributions too – so I would encourage anyone with spare funds to consider this.”
Whilst Danoun acknowledges cash flow can be an issue for sole traders he suggests self- employed people are particularly vulnerable when it comes to insufficient super. He tells KBB sole traders should consider putting a super savings plan immediately into place where they take 10 percent from any payment and put it towards their super.
“They need to start taking their super responsibilities more seriously.”
Small businesses often consider their business an asset that can be sold on retirement to make up for super deficiencies but Danoun says they still need to make super a priority.