Cost of living pressures continue to dominate headlines, with many Australians concerned they'll not have enough to fund a comfortable retirement.
In particular, younger Australians are finding it tough.
A recent article in The Australian explored the costs of modern-day living and why many young Australians are justifiably concerned they'll not have enough to retire when the time comes.
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The equation
In most cases, building a retirement nest egg means accumulating sufficient savings to create and build a retirement account.
According to the Australian Bureau of Statistics, the average weekly ordinary time earnings for full-time adults is $2011. On an annual basis, that amounts to $104,593.
Once upon a time, a 'six-figure salary' signalled a high income earner. However, when taking into account the current cost of living, this status is no longer what it used to be.
According to the Australian, the average weekly spending is $2076 for households who rent and $2301 for households who own a property with a mortgage.
Census data suggests the "average" household is made up of 2.5 people, comprising one full-time working adult, one adult who works part-time, and one child. This equates to average household income being $3016 per week before tax and $2410 per week after tax.
Evidently, the gap between household income and household expenditure is minimal, leaving very little capacity to save.
Making it count
Given these circumstances, it is understandable that younger Australians have become increasingly concerned about their financial futures.
These conditions have been cited to justify the mandatory superannuation rate increasing to 12% this year.
However, even after this increase, many Australians may find themselves short when it comes to retirement. This is particularly likely in the case of those who have spent long periods of time not working (e.g., to have children) or working part-time.
In light of these circumstances, there's never been a more crucial time to start investing outside of superannuation early.
Even regular small contributions can make a significant difference over time due to the effect of compounding.
For example, $50 a week invested at 10% over 30 years could be worth $489,772.
According to the Vanguard Index Chart 2025, Australian shares have increased at an average annual rate of 9.3% per annum, while US shares have averaged 10.8%.
To put this plan into action, young Australians could invest monthly in either the Vanguard Australian Shares Index ETF (ASX: VAS), which tracks the 300 largest companies in Australia, or the iShares S&P 500 AUD ETF (ASX: IVV), which tracks the 500 largest companies in America.
Ultimately, a slight income surplus, solid plan, and discipline could mean the difference between a comfortable retirement and having to work into your golden years.
