Is investing in super a complete waste of time?

Piggy Bank On Deckchair With Sunglasses. Source: Getty Images
Piggy Bank On Deckchair With Sunglasses. Source: Getty Images

If I asked you, ‘how do you see your retirement playing out’? You might say, ‘no idea! I’m too young!’

Or some may say, ‘that’s a long way away’.

Others might say, ‘I’ve got superannuation so I’m sure I’ll be fine’.

All of that sounds perfectly normal, but I want to hit you with a few facts.

The majority of Australians won’t have enough money saved to be “comfortable” in retirement. That’s because roughly half of Australians don’t have any super in retirement at all.

If you’re fortunate enough to have a super balance of between $600,000 and $1,000,000, you’re looking better than most.

Ideally, if you’re a couple, you’ll need to have $1 million saved up either in superannuation or other investments. I suspect most Australians in this position would own a self-managed super fund (SMSF).

What good is all this money though if you’re not around to enjoy it, or it’s quickly eroded by healthcare costs?

The average cost of private health insurance, for example, for one person is around $2,000 per year… and that doesn’t take into account a serious on-going health issue, which can set you back tens of thousands of dollars a year.

It raises a huge question: how can you make investing worth your while?

Enjoying your money

My father didn’t really get to enjoy retirement due to health issues. My father-in-law, however, has been able to enjoy it due to healthcare advances combined with better health.

I can’t help but compare the two.

I guess there are two options: you can make sure you have even more money than you ‘need’ in retirement – so $1.5 million, rather than say $500,000, to cater for healthcare costs; or you can do your best to lead a healthier lifestyle now so you can extend you lifespan, and enjoy it too.

Getting fit

What do I mean by that?

People who… ahh, lead a life full of “indulgence” say ‘you’ve gotta die of something’. Drinking, smoking and eating a lot of fatty food can give you pleasure. But healthcare experts say it’ll come back to bite you.

Why is that? Well doctors say, if we maintain a healthy lifestyle when we’re relative young, we can expect to have a much more ‘comfortable’ physical retirement. If we lead a poor lifestyle, the last 10 years of our life won’t be so comfortable.

Most people decline over a 5 or 10-year period later in life. However, if you’re in good shape, the years leading up to retirement, and retirement, are more likely to be full of fun, adventure and activity.

What does getting into shape look like?

Simple: balanced diet, which can easily include some alcohol, and treats, as well as 30 minutes of moderate exercise three times a week – and that can include team sports.

Health insurance

We all know some health issues can’t be avoided.

That’s when private health insurance comes in. Like any other insurance, by putting some money aside twice a year, you can set yourself up with a healthcare nest-egg for later in life.

And like all types of insurance it’s also a bit of a gamble. If you don’t ultimately end up using private health insurance it can seem like a bit of a waste of money.

I think most people would agree, however, that if you can afford it, it provides invaluable piece of mind.

Betting on good health

The US-China trade war, talk of a global recession, and the wild stock market swings have got me thinking this week. It’s led countless numbers of financial commentators to speculate or forecast on what it means for all of us for the next few years, or longer (in terms of our finances).

For mind, I’d just say expect more volatility. When the US president uses Twitter to openly push the Federal Reserve to cut interest rates, and the 2/10 year US and UK bond yields invert – you can bet your life savings that the future will be highly unpredictable.

But let’s get real for a moment, we all know investing over the long term, rather than the short term, will lead to serious wealth generation, providing you have some money to invest. However, no one talks about why we’re investing.

We’re investing to make later-in-life more enjoyable. And I don’t just mean in retirement. It could even be before middle-age.

So, it’s not just about taking a keen interest in finance and economics, putting money away now for later, and confidently riding through the market storms; it’s also about investing in your health.

If you’re prone to getting sick, get check-ups, if you’re at risk of chronic disease, private health insurance will help, but if you’re basically OK, get fit and healthy now – it’s no good generating wealth if you can’t enjoy it.


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