This is the best kept secret in retirement planning

Anna and Dave earn $ 100,000 a year. Both have $ 200,000 years old. Both receive 12 percent standard contribution from their employers. (To simplify this, we will ignore taxes, we will pay increases and inflation, and we will talk with round numbers).

But Anna moves her early. He puts an extra 12,000 dollars a year using salary victims from 48 to 55. Only eight years of extra contribution – ie a total of $ 96,000. And in doing so, super savings from income tax because it enters the tax rate of 15 percent.

Only now, today’s system’s system has become one of the smartest games in pension planning.

Then it stops extra contributions and directs back the 12,000 dollars to the optional expenditure budget – spending on lifestyle and traveling in the next 50s. He passes the rest of his 50s and retires up to 65, while traveling these extra funds in his budget, enjoying life, while enjoying life, he makes heavy lift in the background in a compound super background.

He did the figures and knows that he is enough to finance his whole life with a 7 percent return from the growing super balance.

Dave adopts an opposite approach. He does not want to think about financial planning in his 40s or in his 50s. After having lived on a child who raised years of children, he sucked extra money in his budget and does not want to run to a super fund that he cannot reach until he reaches the age of 60 and retired.

But the closer he gets to the age, the more real the money that makes you feel super. And in the end, for tax advantages, it decides that it’s time to start adding extra money after you can withdraw it. At the age of 58, he starts to earn extra 12,000 dollars a year for eight years until he is 65 years old. It causes him to curl his lifestyle a little, and frankly he annoys him.

Both decide to retire at the age of 65.

Anna retired with about $ 1.25 million, while Dave has $ 1.14 million of the same money and the same contributions. And if the feedbacks are better than 7 percent in the long run, Anna’s advantage only grows.

110,000 dollars ahead, yes, but more importantly, while his money continued to work for him, he received a ten -year freedom in his 50s and early 60s. This is the power of time and compounds. And almost everyone misses.

Can they start before? Certainly. However, in reality, most people in their 30s and 40s are flat with mortgages, children and other responsibilities. It is impossible to find two spare cents to rub together. For most, the real window does not open until the end of the 40s or 50s, when some of these costs begin to decrease.

It was a lesson that I wish everyone to understand, but it was not an option for previous generations. Super was not mature enough to achieve these results. Only now, today’s system’s system has become one of the smartest games in pension planning.

It works even better for couples. Take Jenny and Josh, Mac and Priya. Both households earn $ 200,000 a year. Both of them have super $ 350,000 at the age of 48. The same starting point. The same opportunities.

Jenny and Josh decide to move early. From 48 to 55, they give an extra grant of 24,000 dollars a year. For eight years of salary sacrifice, each of them is $ 12,000. Then they stop. For the rest of their 50s, they direct this money to themselves, travel, lifestyle and freedom. Super continues to quietly combine 7 percent of long -term returns behind the scenes.

Mac and Priya are not ready to think in the late 40s or early 50s. Eventually, they start saving at the age of 58, and put the same $ 24,000 a year for eight years for up to 65 years. They benefit from tax savings, of course, but curls at a time when they prefer to enjoy their lifestyles.

Both pairs contribute $ 192,000 in extra savings. Both retire at the age of 65. But the results are sharp. Jenny and Josh can retire with about $ 2.38 million. Mac and Priya retire with about $ 2.16 million.

This is a space of $ 220,000 for the same effort. The only difference was not timed. Jenny and Josh release not only with more, but also their lifestyle budgets ten years ago. In their 50s, they were fun and the certainty of reaching “enough”.

That’s why I say your last time in the 40s and 50s. And they come in three open stages.

Installation Phase: Your window to pay short, sharp debts and earn super money as early as possible. You focus on, you save more, you really up and spin the flywheel of the compound investment.

Lifestyle Years: When you enjoy the freedom you have earned, from the middle of the 50s to the end, it has a confident compound.

Then, if you like to work and preferred in the game, you can accelerate yourself to retirement during some years of timing: where you focus less and gradually shape life with your own terms.

Do the installation stage correctly and you will earn twice. It is more fun in your 50s. More money in your 60s. And this is not only for retirement, but to have an epic retirement. It sounds like a good reason to start before and count the most important time for me.

Bec Wilson is the author of the best seller How to make an epic retirement and newly published Prime Time: 27 Lessons for New Middle Life. He writes a weekly bulletin epicretirement.net and hosts Prime time Podcast.

The recommendations given in this article are general in nature and do not aim to influence readers’ decisions on investment or financial products. Before making financial decisions, they should always seek their own professional advice, taking into account their personal conditions.

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