For some, retirement seems like a far away concept that you don’t need to take all too seriously. But sooner or later the hands of time reach out for us all, and there will be a point when you can finally stop working and retire. As time does roll on for many Australians the real question is not when retirement will occur, but whether they’ll even be able to afford to. So how much wealth do you need for the golden years you’ve always wanted?
What level of funds you need in retirement is like asking ‘How long is a piece of string?’, as it will depend on the standard of living you want in your golden years.
I heard an interesting anecdote recently that you will need two thirds of your current annual income in retirement to maintain the same standard of living. So, if we do assume the average life expectancy you can presume you’ll need around $650,000 in your nest egg to maintain a couple in just a comfortable standard of living.
That may sound reasonable on the surface, but for average Australian there is some work that needs to be done. ASFA (the Association of Superannuation Funds of Australia) released a report in 2015 stating the following:
“With average superannuation balances at the time of retirement of $292,500 for men and $138,150 for women, many recent retirees will need to substantially rely on the Age Pension in their retirement."
It’s no wonder that with Super Funds producing results like this and the recent performance that Property on the east coast has provided, that many Australians have turned to buying property in a Self Managed Super Fund as an alternative.
If you are thinking of going down this path I do stress the importance of seeking out professional advice from the outset. I personally have added many properties to my SMSF and some of these have more than doubled in value, and when it comes time to cash in at retirement, I’ll benefit from the capital gains tax exemption provided to SMSFs. To hear more about how I personally time the market to select affordable investment properties please click the banner below to register for tomorrow night’s free webinar.
These kinds of statistics will concern many readers, and for good reason as they find themselves at varying stages heading towards retirement. The below table (also from the ASFA 2015 report) shows the average super balances based on sex and age range for all Australians:
The above numbers paint a rather ominous picture, particularly if property prices continue to climb in the coming decades. If you are not holding property, be it your family home or investments, you may find yourself relying on a government pension just to survive.
I don’t know about you, but I have not worked as hard as I have my whole life to simply “survive” in retirement. That time of your life should be about spending each day enjoying yourself, rather than worrying about if you have enough money to pay the heating bill.
That’s just not living. Prepare yourself and your family to create the future you truly deserve. There are still plenty of property-based opportunities out there, which won’t hurt your pocket now and are perfect for long-term investments. To find out more register and join me on my webinar tomorrow evening by clicking here.