How prepared are Aussies for retirement?

As in many other parts of the world, Australians are less prepared for a comfortable retirement than they might think.  This state of affairs stems from a general confusion (and a bit of malaise too) regarding retirement planning. A survey by CoreData, on West Australian seniors found that there was a huge gap between what the seniors thought they needed for continuing with their present lifestyle and the amount of money they had tucked away in reality. The survey indicated a mere 6% were fully prepared, while 22% were totally unprepared.

And what about healthcare costs?

According to McCrindle research, the majority of Australians over 50 have unrealistic expectations of aged care costs, believing the government will take care of the costs. While only 9% have a solid retirement savings plan, nearly 40% are unsure about funding of their healthcare after retirement.

Aussies expect to put retirement ‘on hold’

A ready to retire study reveals that the majority of Australian’s super accounts are not sufficient with 50% unable to spare the money required for topping up their funds, while 30% still had a mortgage payment as they headed toward (and into) retirement.

More than half of the babyboomers expect to work beyond retirement with 9% sure they just can’t afford to ever really retire. And a major proportion of the seniors plan to use their super savings and cash savings to take care of healthcare costs – which of course will significantly impact their retirement lifestyle.

Good planning helps to retire in style

So how much do you need to retire? Well that depends. What does it depend on? Five key things:

1. Your current age. The younger you are now, the longer you’re likely to work (ie: earn super) with pension/retirement ages being pushed out, but the more you’ll likely need as pensions are likely to be increasingly cut as the boomer generation ages.
2. Your current financial situation (how much you currently have in super, cash and other investments, and your expenses – if you’re still carrying a mortgage, renting or paying for kids’ educations, etc?)
3. If you’re a sole trader – sole traders aren’t required to pay themselves superannuation, which might mean they have very little by way of retirement savings.
4. How well you plan to live in retirement (how much to you plan to travel, explore or learn in retirement vs having a ‘quiet’ life of family, gardening and books – as an example)
5. Your health – if you’re super well/fit now with no ongoing or likely health issues, it’s likely to cost you less into the future. If you do have ongoing health issues, best plan around that now.

But regardless of any of the above, don’t just pic a number out of the air – say $1million. Or even half a million. There are plenty of retirement calculators on the internet (we quite like ASIC’s ones) that will give you a better (ie: more valid) idea of what you’ll need for the particular lifestyle you’re after.

Once you have that number, whatever it is, have a look to see what you’ve currently got in your super account. If there’s a big deficit between what you need and what you have, you’ll need a solid plan on how to mobilise the money needed for retirement.

As a wise philosopher once said, the best time to plant a tree is 20 years ago or today. If your numbers aren’t looking quite as robust as you might like, then you might want to seek help from a qualified financial planner. If you want even more ‘control’ over your super, you might want to investigate setting up a self managed super fund (SMSF) – although it does come with a raft of extra responsibilities.

And that’s where we can help. Mason Lloyd is now an accredited member of the SMSF Advisers Network and can help with setting up your fund, reviewing contribution strategies, transfers of business real properties into SMSFs, withdrawals, etc. So if that sounds like something you might be interested in, we’d love to talk to you. You can call us on 02 6023 1700 or drop us a note via the form below.