Having enough income in retirement is an issue that has been well documented in the press and media. Despite such extensive coverage however, a lot of people still don’t give enough thought to their retirement needs until it’s too late.
While many individuals do have a substantial amount of money in superannuation, investments and other assets, it’s often not enough to fund a comfortable retirement.
To have a comfortable lifestyle in retirement, a recent study conducted by Westpac and the Association of Superannuation Funds of Australia (ASFA) indicates that in retirement, singles need to spend $35,430 a year and couples $47,507 a year. This assumes retirees own their own home. In effect, those needing to fund a ‘feet up’, 20 to 30 year retirement will need a hefty nest egg.
For a significant segment of soon to be retirees, and with the first of the baby boomers turning 60 years of age last year, it seems however, retirement may not be all it is cracked up to be. An ongoing study conducted by Swinburne* of 13,000 people over the age of 45 years, showed that 54% of respondents indicated that it is their intention to work once ‘retired’, with 38% selecting ‘to earn money’ as a reason (as depicted below).
It is concerning such a large proportion are not prepared financially for retirement. It may well be that they have lived a comfortable life, but are facing the consequences of a lack of planning. To ensure retirement is lived as comfortably as it should be doesn’t necessarily mean having to skimp throughout your working life. Rather it is about planning, developing and implementing a retirement strategy that will work.
One of the more straightforward yet effective ways to increase retirement savings is ‘salary sacrifice’. Use your pre-tax salary income to make voluntary contributions into superannuation in addition to superannuation guarantee payments made by your employer.
As well as salary sacrifice, there are other uncomplicated things you can do to increase retirement incomes which include:
- making the most of the Governments Co-contribution scheme
- investing earlier
- investing more, and importantly
- not borrowing for things that you can’t afford.
If you are not fully confident that your retirement planning will give you the retirement income you may require, do something about it now.
To get the best advice, specific to your needs and situation, it’s important to see a financial planner. They understand the ins and outs of retirement strategies and they work with you to create a strategy that will maximise your savings potential.
For more information call 6686 2622.