Retirement is a time of life that many of us look forward to
After a lifetime of working and saving, retirement represents a chance to enjoy the fruits of our labour and to relax and enjoy our golden years.
But to truly enjoy your retirement, we need to have enough money to live on. In Australia, this means having a substantial amount of savings and investments to support our later years.
How much money do you need to retire?
The answer to this question depends on a number of factors, including lifestyle, health and future goals.
According to the Association of Superannuation Funds of Australia (ASFA) Retirement Standard September Quarter 2022, figures have risen in lockstep with quarterly inflation. Couples aged around 65 living a comfortable retirement now need to spend $68,014 per year and singles need $48,266 per year, both up by 1.9 per cent on the previous quarter.
Of course, these figures are just a guide. Your personal circumstances will have a significant impact on how much money you need to retire comfortably. For example, if you own your own home and have few expenses, you may be able to live comfortably on less money than someone who rents and has significant medical costs.
Facing down FORO before it becomes a factor
The Fear of Running Out (FORO) is a common concern among retirees and pre-retirees, which refers to the fear of outliving one’s retirement savings. This is a real concern, as retirees are living longer, and the cost of living continues to rise.
FORO is a result of several factors, including increasing life expectancy, higher healthcare costs and a lack of understanding of the retirement income system.
Many retirees worry that their retirement savings will not be enough to sustain them for their entire retirement, especially if they experience unexpected expenses or market fluctuations.
To alleviate FORO, consider taking a proactive approach to retirement planning. This involves creating a realistic retirement budget, exploring different income streams and investing in a diversified portfolio of assets that can help to protect against market fluctuations.
Proper retirement planning is an ongoing process so plan to review your plan and adjust as needed. By staying informed and proactive, you can help to alleviate FORO and enjoy a comfortable and secure retirement.
How to ensure that you have enough money to retire?
The key is to start planning early and to save as much as possible.
Take advantage of tax-efficient savings vehicles such as superannuation, which allow you to save for retirement while receiving tax benefits.
Invest your money wisely.
This means diversifying your investments to spread your risk and potentially earn higher returns. Many retirees choose to invest in property or shares, as these can provide a good source of income and capital growth over the long term.
Have a plan for your retirement income.
This may involve creating a budget to ensure that your money lasts as long as possible, or it may involve taking advantage of income streams such as the Age Pension or annuities.
Stepping out of the workforce into retirement requires a significant amount of financial planning and preparation. With careful planning, saving and investing, it’s possible to build a comfortable nest egg and enjoy retirement to the fullest.
Seek Professional Advice
It’s crucial to seek professional financial advice when planning for retirement. A financial planner can help you understand your options and make informed decisions about how to invest and manage your money.
OBT’s Private Wealth Advisors can help you to assess your financial situation, set goals and develop a plan to achieve them. Contact our Financial Planning team in Gatton or Esk on 07 5462 2277.
Private Wealth Advisers Bruno Tjelder and Damon Zischke and OBT Financial Planning Pty Ltd are Authorised Representatives of OBT Wealth Services Pty Ltd ABN 13 661 409 838 | AFSL 543251.
The information provided is general in nature. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. This Financial Planning website page(s) is intended for Australian Residents only. The views expressed in this publication are solely those of the author; they are not reflective or indicative of the position and are not to be attributed to the Advice Licensee. They cannot be reproduced in any form without the express written consent of the author.
 ASFA. (2022, November 17). Australian retirees face increased cost of living driven by global factors, but superannuation is buffering the impact. Media Release from https://www.superannuation.asn.au/media/media-releases/2022/media-release-17-november-2022