Naturally, retirees aspire to the standard of living they have grown accustomed to with $750,000 widely viewed as a comfortable retirement sum to fund a reasonable standard of living higher than the ASFA recommendation of $640,000 that is still a pretty tidy sum. Whilst it is better to have a $110,000 buffer - few can afford that.
In order to achieve achieve retirement goals, an annual pension of $44,000 is considered adequate for single person, the ASFA figure is $35,000 but I prefer to be a little more conservative. About $60,000 is required for a couple as shared bills tends to reduce the cost of living.
For the average worker, in order to achieve such goals may need them to take greater investment risks, increase contributions during the accumulation phase, pay lower fees, remain in the workforce longer or alternately they could learn to live on less.
Why work all your life and then budget to live on less, better to start saving a percentage of your income and still enjoy a reasonable life along the journey? There is an argument to enjoy your money now and just rely on the age pension instead taking a lump sum superannuation and squander your retirement benefits.
Why work all your life and then budget to live on less, better to start saving a percentage of your income and still enjoy a reasonable life along the journey? There is an argument to enjoy your money now and just rely on the age pension instead taking a lump sum superannuation and squander your retirement benefits.
This is a difficult decision as the government keeps changing superannuation rules mostly due to their fiscal incompetence with the onus and risk returned to the taxpayer. I still believe forgoing a degree of your salary to fund a retirement despite the risks as the future of the aged pension is rising and the benefits likely to decline.
Geez, I'm going to be WELL short of the $750,000. :-(
ReplyDeleteThat's due to a combination of having worked in areas where superannuation was not compulsorily deducted, and also the first part of my "career" being at a time when super was not deducted at all.
I do hope that the government(s) in twenty years remember that we were the first generation to be expected to fund not only our own retirement (via super contributions) but also the retirement of the previous generation (via taxes used towards pensions)?
Similar to you Andrew I began my working life before compulsory superannuation. Even when it was phased in, it was incremental so individuals such as myself and I'm guessing yourself were always behind. The average person of our age cohort will not have enough superannuation to support themselves in retirement and rely on at least part pension payments. Really, the only way to achieve self-sufficiency is through a windfall, sale of a business or salary sacrificing. Now that the government has changed the rules towards salary sacrificing, couples who have paid off the mortgage, kicked the kids out of home and have a high enough disposable income can't dump funds into super just before retirement. They are really disadvantaged and instead of encouraging savings towards retirement, they are better off spending it now and waiting for the pension.
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