Are you retirement ready?
Did you know, Australians have a $1 trillion shortfall in retirement savings?1 In fact, 69 per cent of Australians aged over 55 feel overwhelmed by their super and retirement finances and more than one in three Australians (aged between 45 and 65 years old) believe that they will be unlikely to reach the level of wealth required to maintain their lifestyle in retirement.2
Why is this?
With advances in medicine and nutrition we're all living longer and this means we'll have more years in retirement. And more years in retirement means we need more savings to fund our retirement plans.
While you want to make sure your retirement savings last as long as you do, it's not just about living – it's about the standard of living you choose and whether you want to live a modest or comfortable lifestyle.
Many people are now choosing a lifestyle far exceeding what the age pension can support.
However, the actual cost to fund a comfortable lifestyle exceeds the age pension as shown in the table below.
* Source: ASFA retirement standard survey March 2015.
While you could survive on the age pension, most people want more – a good car, nice clothes, updated electronics and household goods plus entertainment and holidays. Also, these figures assume that you own your own home when you retire so, if you're still paying off your mortgage or renting a home, you'll need even more.
To support a comfortable retirement, the lump sum amount you need to save in today's dollars by the time you retire is approximately:
While these figures assume you will also receive money in the form of a part age pension, over time, the Government could make changes to the structure of the age pension so you can't rely on age pension to provide the same level of support as it does now.
Is there a gap in your retirement savings? Try out our retirement gap calculator.
To find out more about retirement planning make an appointment with a Bridges financial planner.
1 FSC's Longevity Savings Gap Report September 2012
2 CoreData Post-retirement Report September 2013
3 ABS Life Expectancy Tables