A Guide to retirement in Australia
Money and Life (Financial Planning Association of Australia)
The facts and figures of retirement in Australia
According to the Association of Superannuation Funds of Australia (ASFA), single people require about $28,165 a year to maintain a modest lifestyle in retirement. They will receive more than they would through the Age Pension but will only afford the basics.
ASFA says single people require around $44,146 a year to maintain a comfortable lifestyle in retirement. This will allow them to be involved in a broad range of leisure and recreational activities and to be able to buy household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment and domestic and occasionally international holiday travel.
Both budgets assume that retirees own their own home outright and are relatively healthy.
Of course, everyone is different and their expenses and activities will vary in retirement. They will stop work at different ages and will have different reasons for retiring.
Australian Bureau of Statistics (ABS) figures for 2016/17 show that 36% of men and 22% of women chose to retire when they became eligible to draw on their superannuation and/or the age pension.
The average age for retirement of this group was 62.9 years – men at 63.6 years and women at 62.1 years.
But the figures also show that people retire for other reasons, for example, to care for someone, because of retrenchment or an inability to find work, or as a result of sickness, illness or injury. That means that their time of retirement was not within their control or came earlier than planned.
All these uncertainties complicate retirement planning. Thus, it’s no wonder that a new survey commissioned by Industry Super Australia shows that almost 40% of recent retirees are struggling and that more than a quarter had to go back to work, many to keep the lights on.
That said, many Australians are enjoying a comfortable retirement. How they achieved it is no secret: through good retirement planning.
How do I plan for retirement?
Start with you and your specific circumstances and requirements. Look at your spending, income, assets, savings, current investments, insurance, taxes and estate management. And consider how you should approach your retirement saving as you move through different life stages.
All this may require some tough decision-making. For example, do you want to live frugally now for future financial freedom through the FIRE movement, or would you like to take steady and consistent saving steps? Are you comfortable with more risky investments which may offer better growth but could keep other people up at night? Would you prefer to let the experts manage your savings or to make the investment decisions yourself? Are there ways you could boost your super while enjoying tax benefits? Should you salary sacrifice? And, do you need protection through insurance?
A CERTIFIED FINANCIAL PLANNER® professional who specialises in retirement planning can support you through this journey and help you design a plan that takes into account the many different scenarios that can occur along the way.