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Know What You’re Going to Get in Your Retirement

They say life is like a box of chocolates – you never know what you’re going to get.

But when it comes to the later years in life, it’s best not to leave it to chance. No-one wants to be uncertain about their retirement, so with preparation and some professional advice you can not only know what you’re going to get, but take control and achieve your desired goals.

Several studies show that many people in their 40s and 50s are not prepared for retirement. It is common to see pre-retirees worry they will not have enough money to fund their retirement lifestyle, yet most do nothing about it. Lack of early retirement planning often leads to working more years than anticipated to generate more income and take advantage of strategies which were not made use of in previous years. Alternatively, this could result in facing a retirement where the fortnightly aged pension payment will determine many of their lifestyle choices.

So how do you know if you are prepared for retirement? One of the key things to consider is how much income is necessary to support the lifestyle you would like.

To provide pre-retirees with some guidance about how much they will need in retirement, every three months the Association of Superannuation Funds of Australia (ASFA) publishes figures outlining the cost of two different types of retirement: ‘comfortable’ and ‘modest’.

In ASFA’s March Quarter 2013 Retirement Standard, the annual cost of a ‘comfortable’ lifestyle in retirement for a couple was $56,317. For a more ‘modest’ lifestyle, the couple needed a total of $32,603.

Unfortunately, the income single people need in retirement is not much lower. For a single person, the ASFA figures indicate a retiree needs to spend $41,169 annually for a ‘comfortable’ retirement while a ‘modest’ lifestyle costs $22,641.

Generating that type of income in retirement needs careful thought and preparation well before retirement.

Murray McKinley of McKinley Plowman “People aged 40 and over need to take a hard look at how much they are likely to have when they retire and the strategies they can start using now to increase that amount. Seeking advice from professionals can help you work through your personal budget to determine if you are putting away enough money to achieve your retirement goals and ensuring any income that can be redirected to your retirement nest egg is put in place.

Murray goes on to say, “Although the Superannuation Guarantee paid into employees’ superannuation accounts increased on 1 July 2013 to 9.25% and will continue rising to 12% until 2019, it is unlikely to make a big difference to those close to retirement.”

With 6 in 7 Australians in their 50s being under-prepared for retirement¹, Murray recommends you speak with a financial adviser at McKinley Plowman to help put you on the road to a comfortable retirement.

written by:

McKinley Plowman