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NewsThe Retirement Savings Mistake That 68% of Baby Boomers Regret
The Retirement Savings Mistake That 68% of Baby Boomers Regret

The Retirement Savings Mistake That 68% of Baby Boomers Regret

Retirement is a scary thing. If you consider it for a moment, the term “retirement “ didn’t even exist 50 years ago. 

Prior to then, people simply did not retire. If you were alive, you worked and if you couldn’t work, your care fell to family or charitable institutions.

Looking after frail or invalid members of society was first championed by the Germans in the 1800’s. It only provided for citizens over the age of 70 but luckily for the Bundestag, many didn’t live that long.

In 1908, the newly formed Australian Commonwealth Parliament passed the Invalid and Old-Age Pensions Act.

After the depression of the 1930’s, life expectancy started to increase and all of a sudden more people were living past the age where they had permission to stop working and the money to do it. Finally, they began to retire in large numbers—to stop working, to embrace leisure, move to Queensland and play the proverbial golf.

Now we consider it normal, almost expected that we should be able to retire, even if that isn’t financially possible for many. The idea of “planning for retirement” is relatively new and has really only been around for the past 20 years in Australia.

Baby-boomers who are now entering retirement are scrambling to have enough money to do it comfortably.

A study by the Insured Retirement Institute in the US says 68% of boomers wish they'd saved more, and only 24% are confident that they have enough money to last throughout their retirement.

ASIC (Australian Securities and Investment Commission) says to work out how much money you will need in retirement, assume you need 67% (two-thirds) of your income before you retire in order to maintain the same standard of living in retirement. …check out their site here

ASFA (Association of Superannuation Funds of Australia) estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial Age Pension. ASFA also estimates that because a modest lifestyle is mostly met by the Age Pension the lump sum required to support it for a couple is $35,000 ($50,000 for a single person).

Saving money is a huge challenge for the average Aussie but it’s important to remember that your current lifestyle is not more important than your future lifestyle.

Any advice contained in this article is general in nature in that it does not take account of an individual's specific financial situation, objectives, or needs. 

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Terry
Terry from QLD commented:

Must take you to task: The word "retirement" certainly did exist 50 years ago. My grandfather "retired" in 1937 and I "retired" in 1996 both eligible for a government pension. Government Old Age Pension was introduced by the German Chancellor, Otto von Bismark in 1889, copied by other nations and by the 1920's "Retirement" Villages were being founded. The word "retirement" was being so overused it was removed from the title of "The American Association of Retired Persons" in 1999! 

Someone
Someone from VIC commented:

My husband and I are transitioning into retirement. We have worked hard all our lives and our rule has been “do not spend money you don’t have - the exceptions being a home and a reliable car. Pay off loans as fast as possible. Use credit cards as a tool not a crutch. Pay them off in full every single month - NEVER pay a bank interest on a credit card. Establish a slush fund and keep it for emergencies - build on it every pay day and get the best return possible. It has to become a way of life - it’s about self discipline - especially when trying to bring up a family and provide a non-leaking roof over your family’s head. Sometimes we have tomsay ‘no’. Annette 

margaret
margaret from NSW commented:

WOW. Had a name and sex change on Jan 20th and as this is not unusual I simply filled in the 'this is not you' area and submitted. This happened again today so I was about to do the same when I became curious. I made a note that the club had 314 774 members, and as soon as I changed back to my real name it had 314 775. I wonder how many actual and active members we really have. Looking at the response to most subjects and polls I would suggest, probably not as many as the membership figures suggest. 

margaret
margaret from NSW commented:

WOW. Had a name and sex change on Jan 20th and as this is not unusual I simply filled in the 'this is not you' area and submitted. This happened again today so I was about to do the same when I became curious. I made a note that the club had 314 774 members, and as soon as I changed back to my real name it had 314 775. I wonder how many actual and active members we really have. Looking at the response to most subjects and polls I would suggest, probably not as many as the membership figures suggest. 

Mark
Mark from SA commented:

I agree that one's current lifestyle is not more important than your future lifestyle. My parents lived to 93 and 94, well beyond retirement and did outlive their savings so I have been preparing for retirement for about 20 years, since I was 45. That means a more modest expenditure now on housekeeping, clothing, holidays etc. But I can now afford to retire well and at 64 that is a very comforting feeling. Jill - Adelaide 

Someone
Someone from WA replied to Mark:

Sounds a very good suggestion however the ability to apply it rarely falls to those who most need it. For example a single, low paid worker, is often tied to a rental system that means around 50% of their take home pay goes straight to a landlord for premises that leave a lot to be desired. Unless you are willing to spend your working years in one and a half rooms there is precious little to contribute to preparation for retirement. The chance of being able to finance retirement from a second job looks good from a nine to five weekends off, desk job ,but slightly different when your hours can be any day and almost any hour and the thing you really look forward to is simply lying down with a couple of phone books under the end of the bed, hoping that the pain in your feet and legs will subside enough for you to go to sleep. 

margaret
margaret from NSW commented:

Oops. Forgot to check top of page. Have received a sex change and name change.Thanks again dear club. Sorry Mark from WA The above comment should Have been Margaret of NSW or whatever the club now uses for me. 

Someone
Someone from WA commented:

It's not rocket science to save each pay day! Too many people get into credit card debt. Me? well I always lived on a budget. Saved for that rainy day. Some people even called me a tight arse when they would go on big overseas holidays and max out their credit cards. I was busy saving and paying down my mortgage. Now, I'm the one who is going on multiple annual overseas holidays. The nay-sayers are up to their neck in debt and have didly squat to show for it. I am now completely self-funded and the future looks great! Life is good when you can afford to live it. ps - I didn't live and work in outback Australia for many years for my health! 

Someone
Someone from NSW commented:

Men have had more opportunities whilst the women had to keep house manage bringing up the children on low or no income thats why u c so many struggling at this late stage of their life 

Someone
Someone from NSW commented:

Nursing home entry - do the Nursing Homes really have the right to sell the family home to finance the care of the elderly parents ? Can you take away the mystery here? 

Richard
Richard from NSW commented:

I took voluntary medical retirement after 18 years government administration and then 25 years policing. At 60 old then, with a view of seeking further employment elsewhere away from the problems. Because im post 88 and not on a defined scheme which can be quite comfortable was forced onto state super when I joined police. Try and get a job at 60 old even though ive got university credentials and experience. Its impossible. Don't believe age discrimination isnt rife. It is. They always get around it and you can't prove it. 200 job applications over two years since and only one interview. I keep trawling the sites and applying but nothing. Most dont even bother to respond. I got extra qualifications last year in private and government investigation but still nothing. Im required to do a probationary period first under a master licensee, even after doing the same tasks for 25 years. Bloody sensless. I'ts easy for the govt to say we can keep working until where 70 because we're living longer but thats just an excuse to put the pension back a few years. So ,wth that I have to dig into my super from now at age 62 which will soak most of it up by the time im 66.5 when I can access the pension. Bugger it all. 

margaret
margaret from NSW replied to Richard:

Yes it is hard and the older you are the harder it becomes. It can be easier to get a job from a job so this is an important consideration. Prior to leaving a job, test the waters. It can also help to consider day by day retirement living 5 years before it happens. Think what interests you have, what work would you do if you did not need to work full time for a big wage, and how you could earn a few extra dollars to supplement your pension and prevent death from boredom. This is easier to experiment with when you still have a reasonable cash flow. Initially you need to think of it as a little extra pocket money and forget about 39 hour weeks and $45 an hour wages and concentrate on pocket money and satisfaction. If it grows to a full time occupation good, however it probably will not. It should however provide the little extras that make life enjoyable. Remember every week you will have 168 hours to use up so it is better to spend a few hours making a little money then wandering around spending a little money . 

Richard
Richard from NSW replied to margaret:

Yeh agree bit im not ready to retire full time yet. Yes I should have secured something else before I took medical retirement. 

Terry
Terry from QLD replied to Richard:

Perhaps you should move to Queensland! I "retired" at 67 from Building construction. Got jobs: Selling cars, mobile phones, water reverse osmosis, office clerk,taxi cab driver (age 70 to 80 but back played up), estate supervisor until 83 and have turned down 2 job offers to concentrate on completing the motorcycles I'm restoring. 

Gertraud
Gertraud from ACT commented:

" ...the term “retirement “ didn’t even exist 50 years ago" Really? Should this not read 110 years ago considering that the age pension was introduced in Australia in 1908? 

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