Superannuation is mandated for people who are employed, yet for people who are self-employed they have a choice to place a certain percentage of their income into superannuation. Under the Superannuation Guarantee percentage, the employer must place 10% of the employee's income into a superannuation fund. To increase security in retirement a person may decide to increase their retirement fund through investment strategies such as property development, shares, bonds and savings account.
It is never too late to save for retirement. However you will need to set healthy goals and scale back spending to put extra money into a diversified investment strategy. Delayed gratification is required to be able to put extra money into your retirement plan which may be challenging for some people.
Delayed gratification means waiting for what you want later. In order to save more you need to spend less. You may see people who are wealthy or better still who look wealthy. There are people who have a lot of stuff including bad debt. Delaying gratification requires you not to look at what other people have but what you know is best to do for yourself. Delaying gratification also requires self-regulation strategies. You need to manage your anxiety of not having, your thoughts of wanting things such as an expensive holiday or feelings of jealousy of others. You may do this by determining your goals for retirement, what you value, and then work backwards on how to reach the goals.
Researchers Hastings and Mitchell (2020) identified that financial literacy can improve people's motivation to save for retirement as the largest factor is a lack of understanding about finances and the economy that causes an inability to delay gratification for retirement planning.
Time discounting or temporal discounting is another strategy where you benefit more if you wait. If you prime yourself through visualisation of the benefits you will receive in the future, you will increase your changes of delaying gratification and a secure retirement. For example, you visualise your holidays, spending valuable time doing hobbies you always wanted to do and relaxing leisure time during retirement. The visualization allows you to realise that the long-term savings is beneficial and more important than short term gains. You de-emphasise immediate gain, and emphasise future gain.
In summary, write down what you want your life to look like when you retire, visualise it often by thinking about it and what it would feel like, and then you won't mind spending less to save more for retirement. On the other hand, spend time to learn about finances and the economy to improve your ability to have a more secure retirement through a diversified investment strategy and healthy budgeting.
Cheng, Ying-Yao, Paichi Pat Shein, and Wen-Bin Chiou. “Escaping the Impulse to Immediate Gratification: The Prospect Concept Promotes a Future-Oriented Mindset, Prompting an Inclination Towards Delayed Gratification.” The British journal of psychology 103.1 (2012): 129–141. Web.
Hastings, J., and Mitchell, O.S. “How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors.” Journal of pension economics & finance 19.1 (2020): 1–20. Web.
Book IV: Saving and investing - chapter 3: Saving for retirement (2009). . Hoboken: John Wiley & Sons, Inc. Retrieved from https://login.ezproxy.lib.rmit.edu.au/login?url=https://www-proquest-com.ezproxy.lib.rmit.edu.au/books/book-iv-saving-investing-chapter-3-retirement/docview/189246727/se-2?accountid=13552