How much do you need in your super to retire comfortably
The other day I read a fascinating article that introduced research findings about what majority of Australians believe they need to have saved in their superannuation to retire comfortably.
Those findings really surprised me on many levels, so I thought I would share this information with you today.
How much do you think you need to save for a comfortable retirement?
Is it $500,000? $700,000? $1mil? 2 mil? Or more?
Well, guess what, average Australians believe they need to save over $1.6mil for a comfortable retirement.
And what is even more shocking, people who have never received any financial advice believe that they need more than $2mil.
Contrast this with ASFA findings. According to ASFA the super balance for a comfortable retirement for couples is $690,000 and $595,000 for singles that is an incredible difference which just reveals a lack of understanding of how much is required and where the income is coming from. Sadly, this goes to show that majority of people do not know how to navigate the retirement system and what support is available to them.
Additionally, many Australians would like to leave some legacy to their family and their children, at least 25% of their savings. Well, that does not align with the purpose of superannuation, according to the Albanese government. According to the rules, superannuation is to provide for your retirement, or to support your family on your death or disability. Superannuation is not a way to “tax-effectively” pass on your estate to the next generation.
Superannuation has been set up to provide you with the long-term income support, to keep up with the cost of living and ensure it meets the longevity of your retirement needs. But the intergenerational wealth transfer is not part of the superannuation goals or concerns.
But at the end of the day, superannuation are your savings, and you can really do what you want with it.
The worrying issue about this retirement and how much we need to have to enjoy a relatively safe and satisfying retirement is that lots of people are scared or embarrassed to ask for assistance, explanation, or help. And the main question that most people are scared to ask is: “How much do I need for my retirement?” or “What retirement can I expect to have with funds I have saved?”
Many Australians continue working into their retirement, with many working as their choice, rather than necessity:
- 18% work in the same role but with reduced hours
- 15% work the same hours
- 14% are pursuing their passion, maybe starting a small business or career change
- 10% work part time or in a less demanding role
For me the interesting part was the difference between the advised and non-advised retirees:
- 77% of advised retirees sated that they enjoy their retirement
- And only 52% of non-advised retirees were enjoying their retirement
Additionally, the advised Australians are twice as likely to retire at the time of their choosing in comparison to those unadvised.
And the research found that only 37% of Australians would go to their super fund asking for a retirement planning advise, which I am not surprised, considering that your super fund can only provide a strategy limited advise, and most certainly a limited product advice. At the end of the day, their job is to keep your money with the fund and not go with your money elsewhere, even if this is a benefit for you.
I personally find super funds unprepared for retirement, and with no experience in this environment. This is a very new territory for them.
You super fund might have been great in growing your accumulation savings, but in retirement the goal of the fund is to pay money out, to keep your savings safe, to provide assets longevity and to ensure assistance with other retirement benefits you could be eligible for. Super funds are very new to this area and have no experience, and no ability to deal with the complexity of retirement planning.
And the government is worried, trying to introduce new rules to super trustees to make them responsible and to start introducing new retirement products to assist their members. However, I always say, if something is new, let it run for a while, let it prove itself as worth your attention. I would never invest my savings into a new product that has not proven itself being of benefit and help first.
I hope you found this information and those statistics as fascinating as I have.
I believe that preparation for retirement is another major step in your financial journey that you cannot take lightly, with the first one buying your first family home, taking out the mortgage and setting up your finance and your budget to never miss those repayments, and if possible to pay the mortgage off as soon as you could have.
Now, your retirement planning is just as important or maybe even more. In retirement planning there are no second chances. You do not work any longer. You will never have more savings. You will never be any younger. But there are so many years ahead of you, that is planned correctly, you can enjoy your life like never before. So please make sure you ask for the best retirement advice you can find.
And hopefully you will come to the conclusion that About Retirement is one of those great places to ask for your plan. If this is you, please visit our website AboutRetirement.com.au where on each page you can find the button BOOK A MEETING, that will take you to my calendar, where you can book a meeting that suits your day and your time.
And hopefully I can meet with you soon and we can review your retirement planning needs.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
