Move ahead with the right plan
When it comes to funding your lifestyle after you leave the world of full-time work, one key element can make all the difference: how effectively you plan today.
If you’re still working, it’s not too late to take control of your plans for retirement; but it’s never too early either.
Australians need much more
With an average super balance of $79,002 at retirement,[1] many Australians between the ages of 60 and 64 are not ideally positioned to enjoy a comfortable retirement. According to the Association of Superannuation Funds of Australia (ASFA), a comfortable retirement – as opposed to a modest lifestyle which provides minimal options – enables an older, healthy retiree to:
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be involved in a broad range of leisure and recreational activities
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enjoy a good standard of living and be able to purchase:
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household goods
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private health insurance
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a reasonable car
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good clothes
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electronic equipment
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domestic holiday travel
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occasional international holiday travel.[2]
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How much will you need?
ASFA estimates that if you are a couple, you’ll need $56,236 annually to enjoy a comfortable lifestyle in retirement and if you are single, you’ll need $41,090 annually2.
If, on the other hand, what you need is to maintain your current lifestyle in retirement, you will need approximately 65% of your pre-retirement income. The table below provides an indication of the lump sum you may need to fund such an income.1
|
Pre-retirement |
65% of pre-retirement |
Lump sum required[3] at retirement |
|
$30,000 |
$19,500 |
$254,571 |
|
$50,000 |
$32,500 |
$423,721 |
|
$80,000 |
$52,000 |
$676,701 |
Remember, it’s usually only while you’re still working that you have an opportunity to make a difference to your retirement lifestyle. It also pays to be aware that life expectancy has increased 5.1 years between 1989 and 2009, with life expectancy for males in Australia at around 80 years and 84 years for females[4]. While this is great news, you need to make sure that your retirement savings can go the distance.
Make a difference for yourself today
Developing a plan for your retirement will not only help you make the most of your time in the workforce, you’ll gain a valuable understanding of:
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your goals
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your spending habits today and what they’re likely to be in retirement
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the type of lifestyle you’ll want
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how much money you’ll need
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what you can do now to ensure you have choices in retirement.
Looking ahead
We can help you to take advantage of the many strategies which can help increase your retirement nest egg, while you’re working. We can discuss salary sacrificing, transition to retirement strategies, debt consolidation, super consolidation and whether you can re-visit your investments to ensure they maximise your savings.
Call us today on (08) 9315 4788 to start a discussion about how you could enjoy an adequate income stream throughout your retirement.
[1] Source: AMP. (2011). How much is enough?
[2] Source: Association of Superannuation Funds of Australia. (November 2012). ASFA Retirement Standard.
[3] Based on a June 2006 AMP annuity quote for a 65-year-old male; 20-year nil residual capital value (RCV); nil indexation.
[4] Source: Australian Bureau of Statistics. (June 2012). 4102.0 – Australian Social Trends.
What you need to know
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning Pty Ltd and other companies within the AMP Group will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.
