Financial confidence in retirement

Financial confidence in retirement

By Jim Vass.


In 1992, Paul Keating introduced compulsory superannuation to Australia.

This means (and apologies if it makes you feel your age) that the compulsory superannuation scheme has been in place in Australia for 27 years – almost three decades.

For many retirees, superannuation is finally kicking in.

How much money is enough

Super balances look healthy

New data shows that the average Australian about to retire has more than $300,000 in super. People retiring as part of a couple, obviously have more.

But despite the positive rhetoric from the Federal Government, ‘real people’ are feeling quite differently. In fact, many Australians headed towards retirement are feeling financially insecure. And justifiably so.

Why? Well, for two important reasons.

Firstly, many superfund calculators say that $300,000 is about $700k short of what you really need to retire.

Superfund calculators indicate that a 60 year old with 300,000 in superannuation who would like to retire on an annual income of $50,000, will have depleted their superannuation within 6 to 7 years of retirement.

[Check the ATB  Retirement_Calculator_16102019 (2)]

The amount required at retirement to provide for a modest pension of $50k is $980,000.

Of course, these numbers are based on the average age at retirement and the average life expectancy post retirements. And there are many factors that need to be considered on an individual-by-individual basis.

That said, we use these superfund calculator averages because they provide accurate examples and are excellent food for thought when it comes to your own circumstances.

Super versus Government pension

Secondly, because of increasing super balances, the majority of today’s retirees do not get the full aged-pension, and many eligible Australians (66-year-olds) will not receive any age pension at all.

The thing is, the pension offers reliable, regular income. Recent research by National Seniors Australia shows that regular and constant income in retirement is considered one of the most important elements for a confident retirement.

Super, doesn’t necessarily offer the same kind of regular cash-coming-in ‘stability’ and herein lies the stress factor. Many retirees are worried about out-living their savings, and concerned they’re being forced to ‘gamble’ on something they don’t necessarily understand how to navigate – a sometimes volatile global share market – in order to get the returns they need to fund their post-working years.

If that’s the case, then the banks might, right now, look like a nice, safe and secure option. They may be low risk, but they are low risk with very, very low return.

While policy reform is on the agenda for superannuation, the most important thing anyone can do (and this includes already-retired retirees) is get professional financial planning advice.

SME's Retirement

Retirement must not be financially stressful

There are strategies you can put into place earlier than retirement to help boost your overall super sum. There are strategies you can implement once you’re in retirement, that can help you to maximise what you have and ensure your super goes the distance.

If you have other assets, these need to be factored into your retirement planning too.  Can you either tap into the equity of your family home using a reverse mortgage for example, or, sell up and take advantage of the Federal Government’s incentive to downsize and contribute to super?

If you own and operate a small business, and if you’ve set up a self-managed super fund (SMSF) what exit strategies do you need in place to ensure you augment the potential of your super by the time of retirement?

No matter what financial position you’re currently in, there are always options and strategies to get you where you want to go.

A licensed financial planner will be able to provide you with savvy investment options. A good tax agent will ensure that you have the right strategies in place to minimise your tax liability and maximise your earnings in line with the rules and regulations that apply to you.

Did you know that at ATB Partners, we have skills across, financial planning, tax and accounting?

Contact us. We can help you understand your individual position and ensure that you understand what’s possible so that you can retire with financial comfort and certainty.

This is general advice only. Jim Vass is Licensed through GPS Wealth ASFL No: 254544.
Jim Vass Sub Authorised Representative number 231 554


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