FiftyUps are woefully unprepared for a comfortable retirement
Delayed gratification. I practice it often, usually at the dinner table. I eat my least favorite food first and save the best until last. Some people do it with TV. Record their favorite shows and then watch them later when they can sit down and binge.
Delayed gratification is something we should be practising with our money as well.
We’re facing the reality of having to work longer or retire with less.
Some reports suggest nearly half of the population retiring within the next four decades will not have enough money to live comfortably, with women’ superannuation the worst by around $150,000 at retirement, that’s according to the Association of Super Funds Australia (ASFA).
For those retiring between now and 2055, it’s looking bleak, unless as a couple you have around $640,000 in Super, which is the amount ASFA estimates you need, when combined with the age pension, to fund a comfortable retirement. See https://www.superannuation.asn.au/resources/retirement-standard
A landmark survey of West Australian retirees this week has thrown the spotlight on how much superannuation is enough to fund a comfortable lifestyle after work in WA.
The survey, conducted last month by The West Australian and research consultants CoreData, gathered the thoughts of more than 5500 retirees and pre-retirees.
Worryingly, the survey uncovered widespread confusion about retirement strategy.
- Only 6 per cent feel well prepared for retirement, while 22 per cent do not feel prepared at all.
- They expect to need a super balance at retirement of more than $700,000 to maintain their desired lifestyle.
- This is far more than the average balances of $271,000 for men and $157,000 for women.
- More than 40 per cent of the pre-retirees aged over 55 have no plan for funding their retirement.
- One-quarter of those with no plan will not address it until they retire.
- Two-thirds of pre-retirees expect to rely on the age pension.
So how much do you need? Well it depends on where you live and how you wish to live in retirement.
A family friend of mine recently sold her home in Brisbane and moved to the north of Tasmania. At 60, this has given her substantial funds for retirement provided she doesn’t get too rash. But not everyone wants to move state.
The Association of Superannuation Funds of Australia estimates $60,000 a year can give a couple who own their own home a comfortable retirement. This would include a decent car, private health insurance, holidays in Australia and the occasional trip overseas.
The bad news is the average total superannuation balance of a couple — $428,000 according to the West Australian survey — is short of the $640,000 balance ASFA estimate is required to be comfortable.
Are your expectations of retirement well ahead of what you will be able to afford? The old saying “a champagne lifestyle on a beer budget” comes to mind.
So what can you do?
Go to MyGov or call the ATO on 13 10 20 and find out if you have any lost Super. The latest ATO figures show there are more than 5.7 million lost and ATO held accounts worth more than $14 billion. If you do have lost Super, arrange to have it rolled over into your current fund. If you don’t find any lost Super, pick up the phone and speak to your fund about how you can maximise the money you do have moving forward.
Your relationship with your super should be of utmost importance because reliance on the age pension commits people to a life near the poverty level and none of us want that.
Any advice contained in this article is general in nature, it does not take account of your individual circumstances or needs. If in doubt about your own circumstances and needs you should seek financial advice.