Did you know?
Six out of ten Australians consider having a comfortable time in retirement a personal problem, while about nine out of ten consider it a national problem, according to ABC’s Australia Talks National Survey 2021.
Retirement planning can be a daunting task, especially when it comes to making the right financial decisions that will have a positive impact on your financial future.
In particular, it’s important to ensure you have enough retirement funds to live comfortably after your hard-working years and without the burden of your nest egg running out.
The age pension combined with your superannuation may be the main source of income for most retirees in Australia, however, without additional savings, this may not be enough to fund your retirement goals. By having a financial plan, you can ensure you are on target with your retirement savings to achieve your ideal retirement.
If retiring early is something you are wanting, then it’s crucial to plan ahead for your retirement and ensure your savings are on track to meet that goal.
Early retirement may seem unachievable to some, however with the right financial guidance and strategies in place, it may be possible.
What is the Standard Retirement Age in Australia?
What is the Preservation Age in Australia?
According to the latest Retirement and Intentions, Australia report released by the ABS in 2020, the average retirement age is 55.4 years, yet most Australians intend to retire at age 65.5 years. Australia has no definitive retirement age, however, to be eligible to access your super you must reach your preservation age.
Your preservation age depends on the year you were born, but if you are currently under 65 years of age then 65 would be your preservation age.
What is the eligibility age to receive the Age Pension?
This is similar to qualifying for receiving Government Age Pension benefits. Currently, the age you can receive the Age Pension age is 66.5 years but this could be higher based on your date of birth.
As Australians’ life expectancy continues to rise, there is a high chance that your retirement years could be longer than expected. With a retirement plan, you can ensure your money goes the distance.
It is important to note that when it does come time to retire, a comfortable retirement lifestyle can include a broad range of leisure and recreational activities and to have a good standard of living through the purchase of household goods, private health insurance and domestic and international travel, and the like.
Comparatively, a modest retirement lifestyle requires fewer savings from your income stream but you may only be able to afford the basic everyday living expenses, basic health insurance coverage and small domestic holidays.
Just How Much Should I Have in Retirement Savings?
You might’ve heard you need $1 million to retire – you may have heard this figure being thrown around as the ideal financial retirement amount. But, the truth is there’s no one-size-fits-all amount. A comfortable retirement will look different for everyone.
While seven figures in your super savings may sound great, the reality is most people heading into retirement won’t have anywhere near that amount.
According to a 2019 report by the Association of Superannuation Funds of Australia Limited (ASFA), Australians aged between 60-64 are retiring with a median balance of $154,452 for men and $122,848 for women.
The most common rule of thumb is that the average person will need approximately 80% of their pre-retirement income to sustain the same lifestyle after they retire. However, there are several factors to consider, and not all of this income may need to come from your savings.
If you are wanting to live a comfortable lifestyle in your retirement, then you may need to ensure you are on track with your cash flow management and are applying the right financial strategies that can grow your wealth.
According to the Association of Superannuation Funds Australia (ASFA), the standard amount to achieve a comfortable retirement is:
- $545,000 for a single person
- $640,000 for a couple
Take these into consideration as you start calculating your super and are saving for retirement:
- Future medical costs
- How long you’re expecting to live in retirement
- The retirement lifestyle you’re hoping to live
- The retirement goals you’re wanting to achieve
To build your retirement savings, you may want to consider making extra voluntary contributions to your super. There are several benefits to making concessional and non-concessional contributions to your super.
Two of the main benefits are:
- You can reduce your tax pay
- You can grow your super balance
You can learn more superannuation contributions and more strategies on how to build your superannuation here: How To Maximise Your Super: Superannuation Strategies You Should Try.
Seeking the right financial adviser can help tailor financial strategies to your personal financial situation and goals.
Seek a Retirement Planner to Help You Achieve Your Ideal Retirement
If you are nearing the retirement age in Australia, ensuring you have a retirement plan in place may make a big difference between having a comfortable retirement lifestyle or a modest one. By obtaining personal financial advice, you may be able to provide yourself with the best financial future performance.
There is no average age for retirement in Australia, though many consider 60 years old as a good age to do so. A good rule of thumb is to remember that in order to maintain their lifestyle post-retirement, people will need 80% of their income before retirement.
Do you need help with retirement planning in Sydney?
Reach out to Hyland Financial Planning for help! We aim to improve our clients’ lives with nothing less than success.
