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Planning for retirement

Retirement is a new phase of life with new opportunities and challenges. For people who plan for it, retirement can be a reward after years of working hard.

Unfortunately, few Australians enjoy a comfortable retirement. In fact, many retirees rely solely on the basic retirement benefits provided by the Age Pension.

 How much income will you need?

  How many years of retirement can you expect?

  Super calculators:

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 How much income will you need?

There are many opinions about what is a reasonable and achievable level of retirement income. Essentially, this is another area where individual circumstances and expectations play a big part.

Whatever your circumstances, our experience is that most people find deciding what level of income they would like to achieve in retirement and how to organise it, quite challenging.

Modest vs Comfortable
The Westpac/Australian Superannuation Funds Association (ASFA) Retirement Living Standard defines modest and comfortable lifestyles as being:

  • A modest lifestyle in retirement - a better lifestyle thanth at provided by the Age Pension, but limited to fairly basic activities.
  • A more comfortable lifestyle in retirement – enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of things such as household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

After-tax income before retirement
Our view is that people should aim to achieve retirement income from a variety of sources, which is equivalent to their after-tax income before retirement.

 How many years of retirement can you expect?

On the whole we are living longer. Actuaries, (financial specialists who calculate statistical probabilities based on facts and trends), have noted that life expectancy in Australia has been increasing steadily for some time.

Governments rely on actuarial calculations for planning purposes and, from time-to-time, the Government actuary publishes life expectancy tables to provide objective data to the public.

As you can see in the table on the below, based on probabilities:

  • Men who are currently 55 years of age are expected to live until they are 82 - another 27 years.
  • Women who are now 55 years of age are likely to live until they are 86 - almost another 31 years.

 

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