Are you prepared for retirement? Posted on April 5, 2018
“One of the key trends we are seeing emerge today is a ‘new breed’ of retirees. Rather than slowing down, baby boomers want to maintain their lifestyle and ‘live it up’ in their later years. They are living longer and need more capital to have the lifestyle they want. We all hope for a comfortable lifestyle, but in order to achieve it, we need to change our attitudes towards retirement saving.”
David Evers says there are still expectations that retirement will fall into place. “Relying on the 9% Super Guarantee is unrealistic. A person hoping to retire on $40,000 at age 65 will need around $500,000 in super* – well beyond what 9% super can provide over a working life.” (*See Appendix B for income examples.)
According to David Evers, expecting to receive Government assistance is also impractical. “The Age Pension is not guaranteed and in any case, will not provide nearly enough for a comfortable living.”
In the survey, 53% of respondents named the number one retirement mistake as failure to seek financial advice prior to retiring – with many of the top ranked errors preventable through professional advice.
“We see retirees who have acted hastily or invested inappropriately without understanding the long-term ramifications or tax consequences. The superannuation and tax system are complex and legislation is constantly in review, so it really does pay to get professional advice before retiring” says David Evers.
“People are living up to a third of their lifetime in retirement – a significant length of time to leave up to chance. Getting advice will minimise the chances of making poor decisions and ultimately prolong your retirement income.”
David Evers is an Authorised Representative of Count Financial Limited, an Australian Financial Services Licence Holder (No. 227232) and Australia’s largest independently owned network of financial planning accountants and advisers.
The advice provided is general advice only as, in preparing it, we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, objectives and financial circumstances.
For further information:
David Evers, Robson Partners
Appendix A – Survey results – Financial concerns and mistakes regarding retirement finances
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Survey 1: Client concerns regarding retirement finances^ |
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Survey 2: Financial mistakes regarding retirement^ |
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1 |
Savings will not last through retirement |
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1 |
Failure to seek professional advice prior to retirement |
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2 |
Will not be able to maintain current lifestyle or afford luxuries |
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2 |
Investing inappropriately based on lack of understanding of risk and return |
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3 |
Unsure how much is needed in retirement |
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3 |
Cashing out lump sum Eligible Termination Payments inappropriately |
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4 |
Unsure how much Government pension will be available when they retire |
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4 |
Failure to save enough pre-retirement |
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5 |
Volatility – if lose capital, won’t be able to recover in retirement |
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5 |
Leaving assets in non-income producing investments |
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6 |
Unsure how to invest or what to do with assets |
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6 |
Selling investments when market falls and buying in peak |
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7 |
Financial security of spouse when one partner dies |
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7 |
Timing retirement ineffectively for tax or investment purposes |
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8 |
Accessibility of Pensioner card |
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8 |
Investing inappropriately due to lack of understanding of asset classes and suitable allocation. |
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9 |
Whether or not to make additional contributions to super pre-retirement |
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9 |
Expecting to maintain similar income level post-retirement. |
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10 |
Whether or not to downsize home |
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10 |
Assuming will qualify for Age Pension |
^Top 10 client concerns and top 10 mistakes regarding retirement as rated by Count advisers.
Appendix B – How much capital is required for retirement income?
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Desired annual retirement income* |
Capital required if earning 6% pa |
Capital required if earning 8% pa |
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$60,000 |
$860,000 |
$740,000 |
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$50,000 |
$720,000 |
$610,000 |
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$40,000 |
$580,000 |
$490,000 |
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$30,000 |
$430,000 |
$370,000 |
*Figures are indexed at 3% pa to reflect the effects of inflation. Centrelink entitlements are excluded from the calculations. Calculations are based on a male retiring at age 65 with an average life expectancy of 18 years.
