Have you done enough planning to kick up your feet and live happily in retirement?
Statistics show that almost 30% of Australians regret not contributing more to their Super or retirement savings, while more than half worry that they will outlive their savings .
While there is no specific age to retire by, many factors can influence this decision. Individual preferences, your health, the state of your finances and employment opportunities will all play a role in deciding when you should retire. Regardless, it is always good to make sure that you are prepared for the road ahead.
Plan your financial future
Understanding how you would like to spend your retirement is a great place to start. The Association of Superannuation Funds of Australia (ASFA) currently estimates that singles and couples aged around 65 will need $44,000 and $62,000 per annum respectively to fund a comfortable lifestyle during retirement . This relates to individuals that are relatively healthy and own their home outright.
While the ASFA defines a comfortable lifestyle as the ability to afford items such as private health insurance, a vehicle and domestic and international holiday travel, individual preferences can vary significantly – and it is important that you define what a comfortable lifestyle means to you. Once you have this understanding, you will know how much you need for your retirement and can work towards achieving this goal.
Do enough now to enjoy life later
Once you have an idea about how much you will need to retire, revisiting your cash flows will allow you to better understand the money being spent, areas that you can cut back on and opportunities to save.
While cutting back on your spending is never easy, running out of money in your retirement can be a lot harder! As mentioned earlier, more than 30% of Australians regret not contributing more to their Super or retirement savings. It is good practice to ‘pay yourself first’, where you set aside and invest a portion of your earnings towards your retirement – setting yourself up for financial independence in the future.
Starting your savings journey early will also help you get further ahead. Our previous article focused on the magic of compounding – and why time is your best friend when it comes to wealth creation. As per our example, if a university graduate invests $2,000 initially and tips in $100 a week from age 23 to 33 at a 7% return, he will have $660,000 by the time he is 65! This just goes to show that it is never too early to start saving.
General Advice Warning
The information provided is general in nature. It has been prepared without talking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.
Links to external websites
These links have been provided with permission for information purposes only and will take you to external websites, which are not connected to The Wealth Quay or our licensee in anyway.
Note: The Wealth Quay and our licensee does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.