Time was not on my side …

Superannuation is the unsexiest topic in personal finance as far as I’m concerned. It is hidden away, something my employer does on my behalf that truly does not interest, let alone excite me.

It represents retirement down the ages, something remote and far, far away in the future. Therefore it is absolutely shocking to me that the time has arrived for me to sort out my superannuation!

At the moment, we cannot withdraw from our superannuation account until we are 60 years of age. Who knows if the government would change this rule in the future?

This is another layer of uncertainty with superannuation over the years – rules change on when you can withdraw, how much you can invest in it etc etc. That said, I am assuming that the government would have to give sufficient notice if they were to change the age rule … surely they would face a voter backlash …

All of a sudden, 60 years of age is not very far away anymore. I only have thirteen years left for my nest egg to grow.

Time is no longer on my side!!!! That is the reality of a late starter to FIRE, sigh!

I need every cent to compound & grow so that my nest egg will be ready by age 60.

The Barefoot Investor suggests that we ought to salary sacrifice 5.5% of our gross salary into superannuation once we’d purchased our house. This was in addition to the 9.5% compulsory employer contribution. I had not been salary sacrificing at all whilst I had a mortgage as I had wanted every cent in my loan account.

Using the superannuation calculator on ASIC’s moneysmart website, I found out I would need to salary sacrifice substantially more than 5.5% if I wanted a decent nest egg at 60.

In the end, I decided on 15% ie I would ‘sacrifice’ 15% of my gross salary & have my employer pay that amount into my superannuation account instead of my bank account. This was in addition to the usual 9.5% employer contribution.

However, even at this increased rate of contribution, my nest egg would fall short of the one million dollars target. This is where I want to tell all young people – time is on YOUR side – salary sacrifice now and you will be pleasantly surprised by the substantial nest egg waiting for you at 60.

I had two superannuation accounts, one with an industry fund that my employer makes contributions to and a second retail fund set up when I first started work many years ago.

I had stopped contributing anything to the retail fund when I bought my house.

My next action was to consolidate these two accounts into one. I chose the industry fund as it had lower management fees. It made sense not to pay a higher management fee to the retail fund.

I was shocked however that by simply rolling from one fund to another, I lost $3000 in exit fees. That nest egg just got smaller …

Then I had to decide on which investment option to invest in within the fund.

Do I stay in the default Balanced option or look at another option? I did the fund’s online survey to assess my risk appetite / tolerance and promptly ignored its recommendation to stay in the Balanced fund.

I found out I could split my portfolio and invest in different options. Once again, bearing in mind that time was not on my side, I decided that I was still in the accumulation phase ie I was still accumulating my wealth which meant I needed higher returns (read higher risk) but at the same time, I was also terrified of losing it all.

After much internal debate, I settled on 40% invested in the Balanced option & 60% in the Shares option.

Phew! That was a marathon! Big pat on the back – can’t believe superannuation is sorted … for now








Analysis paralysis

Wikipedia defines analysis paralysis as ‘the state of over-analysing (over thinking) a situation so that a decision or action is never taken, in effect paralysing the outcome.’

That was such an accurate description of the state I was in! I was reading so much from all sources plus listening to podcasts that I ended up really confused and paralysed as to what I should do or where to start tackling my finances. To say I was overwhelmed was an understatement.

My internal dialogue would go as follows (this example was just on superannuation but I went through the same process for each aspect of my finances!):

How do I know how much I’ll need in retirement? All the experts say I need a million dollars …. quickly, how much do I currently have in superannuation? Where did I file the paperwork? Wait a minute … is that all I have after working more than 20 years? I will never get to a million dollars! How can I retire in the traditional sense, let alone achieve FIRE?

Should I keep both my superannuation accounts? Or combine them into one account? What if one fund ends up performing poorly? The second fund might do better? Wasn’t it good that all my eggs were not in one basket?

If I combine the accounts, should I stay with my industry fund? Or join the industry fund recommended by The Barefoot Investor? What is the difference between any of the funds?

According to The Barefoot Investor, I should also have been salary sacrificing 5.5% of my pay into super once I bought my house. Well, I didn’t do that, did I? I had wanted every cent in my loan account to reduce the amount of interest due. That meant I was way behind, right? I was in my late forties, after all. So was 5.5% enough to play catch up? Could I afford to contribute more? If so, how much more?

The questions were endless … I could not answer question B because I did not know the answer to question A so how could I then proceed to question C? etc etc. I would go to bed thinking I had made a decision only to wake up the next morning asking the same questions again and internally debating the various scenarios.

Wikipedia further states ‘A person might be seeking the optimal or perfect solution upfront, and fear making any decision which could lead to erroneous results, while on the way to a better solution’

Yep, that was me again! I was so afraid of making the wrong decisions and absolutely terrified of the consequences of those wrong decisions. I was looking for a perfect solution. I felt that time was not on my side and I could not afford to make any mistakes.

All the indecision was driving me insane. I was usually a decisive person but delving into the world of personal finance was way out of my comfort zone and fear of the unknown was paralysing me.

I don’t know how or why but one day, I just decided to take baby steps & start somewhere … after all, a journey of a thousand miles begins with a single step.


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