When it comes to retirement, having a large amount of money saved up can be a very good thing. After all, this can provide you with greater financial flexibility and the ability to enjoy your later years to the fullest.
With that in mind, here are a few strategies to help you grow your retirement savings significantly.
Take full advantage of your super
For the majority of readers, when they are paid their employer will also make a contribution to their superannuation. While this is great and has the potential to build up a sizeable nest egg, you don't necessarily have to settle for that.
That's because the ATO allows you to make additional super contributions each tax year. You can do this by asking your employer to pay part of your pre-tax pay into your super account. This is known as salary sacrifice or salary packaging.
These payments are currently taxed at 15%, which is likely to be lower than the marginal tax rate for most taxpayers. This means that less of your pay will go to the tax man and more will go to your nest egg.
Load up on ASX shares
When you are many years away from starting your retirement, you have time on your side and can afford to take a few risks with your nest egg. This doesn't mean investing in high-risk meme stocks like Weebit Nano Ltd (ASX: WBT), it just means you could build a portfolio with growth characteristics. Whereas when retirement is on the horizon, it is arguably more appropriate to focus on capital preservation.
By doing the former, you have the chance of matching or even beating the market return over a long period. This can make a huge difference to the ultimate value of your nest egg.
For example, investing $10,000 each year with a 9.6% per annum return for 30 years would turn into almost $1.7 million. Whereas a 6% return would be a touch under $850,000.
Don't forget to diversify
Relying on only a few ASX shares in your retirement portfolio may not be the best approach to take. To secure a more robust and successful portfolio, it may be better to diversify your investments. This means spreading your holdings across various sectors. Doing so can help protect you from market volatility and contribute to the growth of your portfolio during favourable market conditions. For example, you could consider including tech shares, bank shares, energy shares, biotech shares, and retail shares to create a well-rounded portfolio.
Final word
All in all, building a comfortable nest egg for retirement can be crucial to fully enjoy your golden years. By following these strategies, you have the potential to work towards accumulating substantial savings that will support you throughout this period.
