Working towards the Retirement Nest Egg
According to the Association of Superannuation Funds of Australia Retirement Standard, a single person will generally need $40,391 per year to fund a comfortable retirement, while retired couples need to generate an annual income of at at least $55,213.
The AMP Retirement Adequacy Index shows the average Australian would need approx. $49,000 per year. The full Age Pension is $20,090 for singles and $30,300 for couples.
Of course, the actual amount required varies between each individual and is directly related to lifestyle standards, location, general health and well being, etc. Many retirees are raising grandchildren, or wanting to contribute to their grand children’s education. Retirees usually have a preference to travel regularly while still capable of mobility and adventure. The majority wish to be able to transfer wealth to the next generation.
If your goal is to reach retirement as a self funded retiree, or a semi self funded retiree, it is especially important to be disciplined with your savings, contribute additional funds to your superannuation in a tax effective manner, consider growth style assets that are capable of producing income, as well as give due consideration to ongoing expenditure.
If you start early enough, work with sound financial advice and remain disciplined, you can expect to reach better retirement portfolio values than you would have, had you not followed this pathway.
My grandfather would say “Always count your pennies and the pounds will take care of themselves.” He was around during the pounds, shillings and pence era. In the current economy, inflation has it that the cents really don’t have much purchasing power, except if they’re bundled into dollars, then used to reduce debt and invest into growth and income producing assets capable of replacing your employment income at the point that you move from employment into retirement.
There wouldn’t be too many Australians, currently working in full time positions that would be happy to live in retirement on the Centrelink Age Pension alone. Embrace the opportunity to make a positive difference to your lives with the help of a Financial Planner.