The Australian Financial Review has recently published the article 'Do you actually need $1m to retire?' with the view point that not everyone needs $1m to retire.

While you might not need $1 m to retire, here’s why I advocate that you should plan on having more than $1m by retirement.

The numbers from Super Consumers Australia state that if you are a couple who want to spend $81,000 per annum in retirement then you would need around $1m in savings at age 65 on top of your income from Age Pension.

Here’s three reasons why you should have more than $1 Million at retirement:

  1. Given how much politicians change the rules, I advocate that my clients not rely on the Age Pension and ensure they have accumulated sufficient wealth at retirement to be self-funded where possible. Retirement is less stressful when you are not wondering when they will change deeming rules, or the asset test or increase or decrease the Age Pension payment amounts.
  2. What you need in retirement is dependant on how you wish to live in retirement. My clients do not spend less in retirement then in their work life. They suddenly have much more time in their day to go to lunch, play golf, see movies, and the biggest spend – travel. On top of this is there is often the retirement big toy purchases – caravan and new 4WD or boat.
  3. For many retirees, the reality is - it is not just about them, but also assisting adult children with mortgages and grandchildren with education expenses.

The article also refers to a single retiree only needing $88,000 in savings if you want to retire on $34,000 per annum. The single Age Pension amount is currently $25,359 per annum, inferring that the difference of $8,641 per annum is drawn from savings. The Account Based Pension Calculator at moneysmart shows if you received $8,641 per annum from $88,000, even earning 6.5% per annum, you would run out of super by age 76. After that you are totally reliant on the Age Pension.

The best plan is to work out what retirement looks like for you and then plan to fully fund that. If you are 10 years or less from retirement now is the time to act!

For more information on this topic, watch my video 'How much Super do I need when I retire?' through the link below.

 

Please feel free to contact me, or give our Wealth Management team a call on (07) 4154 0400 to talk about your retirement. 

 


Source:

https://moneysmart.gov.au/retirement-income/account-based-pension-calculator

https://www.superconsumers.com.au/retirement-targets 

https://www.afr.com/wealth/superannuation/do-you-actually-need-1-million-to-retire-20220718-p5b2hc?utm_campaign=later-linkinbio-financialreview&utm_content=later-28351182&utm_medium=social&utm_source=linkin.bio 

 

 

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