What you need to know
Thanks to our high standard of living and medical advances, Australians are living longer than ever before. A male retiring at age 60 will likely spend around 24 years in retirement and a female 27 years*. While this is good news, being able to enjoy such a lengthy retirement will require more savings and better management of your investments than previously envisaged.
According to the Association of Superannuation Funds of Australia (ASFA), a single person seeking a comfortable lifestyle needs a yearly income of approx $44,000 (after tax) ^. That requires savings of around $545,000 at retirement to provide this level of income for the next 20 years +. If you are a member of a couple, ASFA suggests you’ll need approximately $640,000 in retirement savings and need to generate nearly $62,000 (after tax) per annum to live comfortably^
Retirement is a milestone marking the start of a new phase in your life. If you’re well-prepared, you can look forward to freedom from a set routine and the opportunity to enjoy many things you haven’t had time to do while working.
Your quality of life and financial security in retirement will depend on you having an adequate retirement income. The decisions you make now about your superannuation and any other savings once you retire are of critical importance. Whether you intend to move into full retirement straight away, or scale down to part-time work first, there are many issues to consider before you make any changes.
When we support you with personalised financial advice, we conduct in-depth analysis to understand you and your current situation and goals so we can present you with the most appropriate options to suit you in retirement.
We can discuss your ideal retirement lifestyle and when you'd like to stop working. We can also help you work out how much income you might need in retirement, and gain an understanding of the types of investments and risks you are comfortable with.
At FinNest Financial, we take the time to get to know what a successful retirement looks like for you. From the many choices available to you, we will deliver a strategy to suit your individual circumstances and help achieve your retirement aspirations.
Start planning now
No doubt you would like to be one of the fortunate ones who is in a position to dictate when and how they retire. At FinNest Financial, we can help make that a reality, by supporting you to plan, grow and protect your retirement wealth. The right advice, supported throughout your lifetime, can make a real and tangible difference to your retirement outcomes, as it has for so many of our clients. Click here to see some success stories from our happy clients whom we’ve supported with fantastic retirement planning advice.
To find out how we can help you plan a successful retirement, call 07 3831 7629 or email us today.
*Australian Government Actuary, Australian Life tables 2010-12.
^Association of Superannuation Funds of Australia’s Retirement Standard September quarter 2019.
+Colonial First State. May 2012. Assumptions earnings 7.7% with inflation at 3% paid via an indexed pension and net of all fees and taxes.
How the right advice can help
You can use a number of strategies to achieve your Retirement goals. The following case studies provide examples of this.
Judy is 55 years old and is currently working full time with no plans to change her employment arrangements. She wants to retire at 65. She has an annual salary of $50,000 and $300,000 in super. Assuming her 9.50% employer super contributions continue until she reaches 65, she’ll have around $640,900 in super by the time she retires, which will give her a minimum income of $32,045 pa in retirement.
After speaking to her financial adviser, Judy decides to implement a strategy that could significantly boost her retirement savings while having little impact on her day-to-day budget. She uses her $300,000 super balance to start a pre-retirement pension, drawing down the minimum payment allowed which is $12,000 a year. This gives Judy more income than she needs, so she arranges with her employer to make additional contributions to her super from her pre-tax salary under a salary sacrifice arrangement. Her adviser works out exactly how much she needs to contribute to super through salary sacrifice so that her after-tax income is unchanged.
Even though Judy is still receiving the same amount of after-tax income as before, by implementing this transition to retirement strategy, she is able to increase her super balance rather than reducing it, helping her build valuable additional retirement savings.
By using this strategy, Judy could end up with approximately $72,000 extra in her super fund by the time she turns 65, with no effect on her cash flow. These extra funds could increase her minimum retirement income to around $35,600 pa.
Sound advice is the key to success
As you can see from this case studies, the right type of investment and an effective financial strategy could make all the difference to achieving the lifestyle you want in retirement. FinNest Financial offers knowledge, expertise and experience. We’ll take the time to understand your individual circumstances and retirement goals, then recommend appropriate strategies to help you achieve those goals.
Assumptions: Earning 7.7% pa after fees and before taxes with inflation at 3% using 2019-20 tax rates. Pension is paid as an allocated pension. Superannuation guarantee contributions are 9.5% of gross salary before any salary sacrifice. Assumes 50% of superannuation benefit is tax free and 50% is taxable. All superannuation contributions and pension payments are made regularly throughout the year. A change to any of the assumptions and variables can provide significantly different results. This case study is for illustrative purposes only. Your circumstances have not been taken into account.
This case study and any graphs or examples included in this case study are for illustrative purposes only and are based on specific assumptions and calculations. Individual circumstances may vary and this will alter the outcome. The case study does not represent any forecast or guarantee on return.
The information provided on this website is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs. In particular, you should obtain professional advice before acting on the information contained on this website and review the relevant Product Disclosure Statement (PDS).
Relevant PDSs can be obtained by contacting us. No representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions or other information contained on this website. This website may contain certain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control. You should not place reliance on forward-looking statements. To the maximum extent permitted by law, we and Matrix Planning Solutions Limited disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered as a result of relying on anything on this website including any forward-looking statements. Past performance is not an indication of future performance.
Finnest Financial Pty Ltd ACN 163 390 547 is a Corporate Authorised Representative No. 440812 of Matrix Planning Solutions Limited ABN 45 087 470 200. AFS & ACL 238256.