Cycling to work lays path to retirement riches
Commuters who swap their car for a bicycle are on the right path to becoming a millionaire, and a healthy one at that, according to figures from Bicycle Victoria.
Ride On Magazine editor Stephen Huntley says workers who replace the daily drive to and from the office with a bike ride could reap millions of dollars in savings, extra superannuation or strip years off their mortgage.
''With many people trying to do more with less, the potential to save thousands of dollars a year, and millions of dollars over a working lifetime, means swapping a car for a bike will have dramatic effects on a family's wealth and their quality of life,'' Mr Huntley said.
Calculations show that by replacing a car with a bike and investing the difference, a 25-year-old would have more than $2million in cash by retirement age, after making regular monthly deposits at 6 per cent compound interest.
Bicycle Victoria said it costs about $1000 a year to own and maintain a good quality bicycle, including the initial purchase, accessories and servicing.
According to the RACV, the most cost-effective medium-sized car, the Suzuki Kizashai, comes to $10,623 a year, including on-road costs, registration, insurance, fuel, licensing and depreciation.
Mr Huntley said many drivers did not realise the financial drain involved in owning a vehicle or how much could be earned simply by investing those savings.
''The earlier you make that choice, the bigger the savings. But even much later on in life, there are still huge financial benefits to be had,'' he said.
The payout multiplies when you salary sacrifice those savings into superannuation, charged at a 15 per cent tax rate rather than the marginal rate.
A 25-year-old earning $60,000 a year and salary sacrificing $14,000 a year into a superannuation account earning 7.5 per cent, could have more than $3.5million in their retirement fund by age 67.
A 45-year-old could add an extra $677,490 to their superannuation by retirement age.
The returns were calculated using the MoneySmart superannuation calculator and compound interest calculators offered by ASIC at www.moneysmart.gov.au.
Mr Huntley said that in addition to the staggering financial benefits, riding could save time on a peak-hour commute and had impressive health advantages.
''My commute is to the outlying suburbs and takes almost an hour, but it's still far quicker than taking the car through peak-hour traffic and also slightly faster than going by bus,'' he said.
''It also means I've done my exercise for the day and don't have to then spend another hour going to the gym, or a run, before or after work.''
Electric bikes were a great alternative to the regular push bike for people who had to travel a longer distance.
''These days, electric bikes are reliable, are barely distinguishable from regular bikes, and have light batteries. They can travel over 70km with one charge and make long and difficult commutes manageable even for those who aren't very fit.'' Mr Huntley suggested that people who feel tentative about riding to work start with small distances and easy rides.
Another alternative was to ride a bike part way and catch public transport the rest of the way.