Why people don't save for super

5 min read

Why don't you save enough for super? Maybe it's how you think. New cutting edge research from UNSW has found that how much we save for super is closely linked to whether we're focussed on the past, present or future.

UNSW academic, Joanne Earl, says that by knowing where your own focus is you can actually plan better for your retirement and get more active in putting away super savings.

Your optimism and your Australian 'she'll be right' attitude, surprisingly, could be holding you back from a secure retirement. 

Australians aren't saving enough super

When it comes to saving in super, Australians think they're doing a pretty good job.  Some 70 per cent of Australians think they will be able to live off their super. But the facts don't back that up. “The reality is only 30 per cent do retire on their super because it runs out quickly,” Earl says. 

Earl also notes that, according to the Australian Bureau of Statistics (ABS), one million Australians don't have a retirement plan.

Why aren't you saving enough?

Earl's research found a close connection between how you think about the past, present and future (or time perspective), and how much you save for things like super.  You can find out where your focus is by completing the quiz here: http://www.thetimeparadox.com/surveys/

The good news is that 3 out of the 5 time perspectives are associated with successful planning for retirement.

Past negative: You tend to think about what's happened rather than what will happen. When it comes to saving, if you're focussed on negative aspects of the past it could actually be helpful. You save because you don't want to make mistakes others have. (You don't want to end up like your parents who might not have saved enough super!)

Present hedonistic: You live in the moment. Surprisingly, you're a pretty good super saver because you want to maintain your lifestyle into the future. You're motivated to save because you want enough money so you can take those cruises on the QEII.

Future focussed: You're a good planner. You plan everything from your career, your home and even your family. Saving and super is just one more thing you plan.

However, if the way you think about the past, present and future aligns to one of the final two time perspectives, it could mean you tend not to put away enough super.

Past positive: Earl says that people who look to the past in a positive way - if you always focus on the bright side of things - may not save enough. “They don't think there's any need to plan,” she says. “They think that things will work out fine for them because they believe they always do.”

Fatalists: The other type who struggle to save are fatalists. “They leave everything to fate,” Earl says. “They think that whatever happens will happen, good, bad or indifferent, so what's the point of planning or saving?”

No need to be stuck

Earl says that if you're 'past positive' or 'fatalist', you don't have to be stuck. “If your top score is one of these last two then review your quiz results and apply your past negative, present hedonistic or future focus (whichever is highest) to improve your planning,” she says.

Earl also suggests taking the information with you when you visit a financial planner. You might, for example, now know that you tend to think too positively. A planner can help you realise the importance of focussing on the future and the need to put money aside for super.

Earl says there are a few other ways that you can get more motivated to save super. One is to get to know yourself better when you retire. Visualising yourself at 65 or 70 and the lifestyle you want makes retirement more real.

The other is to look closely at the Age Pension. What lifestyle will that give you? And how does it differ from your current lifestyle? The gap could motivate you.

Know yourself

Earl says that whatever your tendency, when you're trying to engage and save for super, it's good to know where you fit because it could affect your strategy.

Do some reflection; work out how you think and whether that impacts on how much you save. Then create a retirement plan that will ensure you have enough retirement savings.  And that could well mean putting more into super.

For more tips on getting active with your super, visit our Super 'next steps' page or call 132 135 and speak with one of BT's Super Specialists. 

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