Valentine’s Day is the perfect time for your children and perhaps your grandchildren to reflect on the things they love and cherish—whether that’s their relationships, passions, or, perhaps surprisingly, their finances.

When you think about it, doing the right thing with their finances now is a way of showing themselves love in the future.

Retirement planning can often feel overwhelming, but with the right mindset and some strategic moves, they can build a future that they’re excited to embrace. Here are the top five things they should keep in mind to ensure their retirement is as sweet as the chocolates they’ll indulge in this Valentine’s Day.

1. Beautiful, huggable compound interest

The power of compound interest means that even small super contributions can grow significantly over time. Employer contributions to superannuation are good, but why just rely on the minimum money going in? Kicking in a little bit extra each month can have an enormous impact in the long run. The key is to make extra contributions as early as possible.

Someone who starts in their 20s or 30s is giving their super time to grow. Those extra years of compounding interest means they’ll be able to enjoy the fruits of their labor in retirement.

The following chart compares two superannuation balances over a 30 year period. As you can see, a 35 year old couple making extra contributions of just $200 each per fortnight have added $642,000 to the final accumulated balance.

The above assumes two 35 year olds, each earning $100,000 pa, with $100,000 super balances. Super is invested in a growth portfolio returning 8.04% pa before tax. Illustrations are indicative and outcomes are not guaranteed. Values are shown net of inflation, assuming a CPI of 2.5%% pa.

Tip: Automating extra super contributions through a small salary sacrifice means there’s no need to think about it. Plus, that money will come out before tax, so it’s an effective way to save.

2. Do what you love

When retirement is decades away it’s hard to imagine what that might look like. But one way to think about your goal is to focus on what you love doing now. There’s a good chance that if you love travel, eating out and going to concerts now, you’ll want to keep doing those sorts of things when you retire.

So, really you want to have an income in retirement that lets you pursue similar interests in the years ahead. You want to have the financial security that gives you freedom of choice in the future. That’s the goal. Now you need to design a roadmap for how much you need to save, how it’s invested and how it can be structured to provide the income you’ll need.

3. Spread the love

It’s easy to fall in love with ‘the one’ on Valentine’s Day. But when it comes to investment, being wedded to one kind of asset might not be the best strategy. Investment portfolios should have a little bit of everything to thrive.

Diversification can mean investing in a variety of asset classes, e.g. shares, real estate, bonds. It can also mean having a share portfolio with a balanced exposure to a variety of industry sectors and companies.

For a more tailored approach, consider consulting with a financial advisor who can help you create a well-rounded portfolio that fits your risk tolerance and retirement goals.

4. For better, for worse

Marriage vows used to promise that couples would stay together for better or worse. But how many of us have actually thought about that means in practice? It’s easy to underestimate how quickly a health emergency can lead to financial strain.

Without having the right insurance in place, a mortgage, school fees and out-of-pocket costs can become overwhelming. And that’s when long term assets and investments can be at risk.

For example, if you experience a sudden illness and can’t work for an extended period, income protection insurance can help cover your expenses. This allows your savings and investments to continue growing, rather than being depleted.

5. Get engaged

Staying engaged with your finances is a crucial aspect of ensuring a comfortable and secure retirement.

While it may be tempting to set and forget your super, regularly monitoring and actively managing it can have a significant impact on your financial future.

  • Keep an eye on how your investments are performing.
  • Review how your balance is travelling and see if you’re in track.
  • Revisit your budget each year.
  • Assess your insurance cover.
  • See if you can afford to contribute a bit more.

Happy February 14

As you enjoy Valentine’s Day, take a moment to show yourself some financial affection. Planning for a retirement you’ll truly love is an act of self-care and consideration for the future. By starting early, setting goals, diversifying your investments, managing withdrawals, and planning for healthcare, you can make sure that your golden years are filled with the things you enjoy—without financial stress.