Savings strategy for baby boomer

There’s no one-size-fits-all answer, but the article shows the trade-off using numbers: paying off an $85,000 mortgage in 10 years at an assumed 8% interest costs about $477 a fortnight (≈$12,400 a year). By contrast, salary sacrificing $500 a fortnight (≈$13,000 a year) into super could grow to about $550,000 by age 65 assuming a 6% return and 2% annual salary/contribution growth. If you’re not spending all your income, increasing salary sacrifice into super may be the better way to grow retirement wealth; but if you want mortgage-free security sooner, prioritise mortgage repayments. The right choice depends on your risk tolerance, cash flow and retirement goals.

According to the article’s example, contributing $500 a fortnight (about $13,000 a year) into super could accumulate to roughly $550,000 by age 65, assuming the fund returns an average 6% a year and your salary and contributions increase about 2% annually. Those assumptions drive the estimate, so actual results will vary with investment returns and contribution changes.

Using the article’s example, wanting $35,000 a year in 2021 dollars (about $26,000 in today’s dollars at a 3% inflation assumption) means the projected savings would last for the statistical life expectancy of about 22 years. That suggests the $550,000 estimate could support that spending profile to typical longevity, but individual longevity, investment returns and spending patterns will affect the outcome.

The article notes mortgage repayments plus the $500 fortnight super contribution consume roughly $31,000 of an $84,000 salary, leaving about $36,000 after tax for living expenses. That leaves limited scope to borrow and service a large property loan before retirement. If you have spare cash flow, increasing salary sacrifice into super is recommended rather than taking on big new property debt before retirement.

Yes — the columnist describes the four-way split (Colonial First State shares, BankWest children’s fee‑free account, LifePlan Australian Equity education fund, and a UBank high‑interest account) as a reasonable spread. The mix gives exposure to growth and interest-bearing options and allows compounding over time. Just be aware of the individual risks in each option and review funds that have volatile performance.

The BankWest product is fee‑free, not tax‑free. The Bonus Saver pays a 10% bonus rate when you deposit between $25 and $250 a month and don’t make withdrawals. After 12 months, amounts over $1 in the Bonus Saver are swept into the linked Children’s Savings Accounts. Always check current product terms before committing.

The article calls gold more of a straight punt for education savings. Measured in Australian dollars it was still below its February 2009 peak at the time of writing, and gold’s local performance is strongly influenced by US dollar movements. If the US dollar weakens and the Australian dollar strengthens, gold may not perform well for Australian investors — so gold is a higher‑risk, speculative option rather than a core education‑savings strategy.

The columnist warns caution: the geared share fund mentioned took a pounding through the Global Financial Crisis and has only recently returned to positive returns, while the resources fund produced a 26% gain over the past 12 months but still showed a loss over three years. Commodity prices can be volatile and may decline rapidly, so consider the risk of concentrated exposure and think about reducing resources exposure if commodity‑boom headlines get bigger — possibly over the next year or two.