The good news is that we’re tending to live longer. Improvements in medical science and lifestyles mean the average lifespan is now nearly 80 years old for Australian men and just over 84 years old for women.1
But the bad news is that your savings will need to last longer and you may have to wait longer for your pension entitlements. The pension age for men and women is gradually increasing over the next decade,2 which will give you less money overall in retirement.
Boost your super before retirement...
While you’re still working, it’s a good idea to think about how much money you’re likely to need in retirement. Everyone’s income needs in retirement will be a little different but as a rule of thumb, a comfortable retirement with a broad range of leisure activities will cost the average Australian couple an estimated $57,665 a year.3
This might seem a lot. But putting a little more into your super every pay day can really help build up your retirement nest egg. And if you’ve reached your super preservation age (usually 60), you can boost your super by starting a transition to retirement (TtR) strategy. This allows you to maintain your work hours, increase your salary sacrifice contributions to super and supplement your income with a TtR pension.
...and make your savings last in retirement
Once you’re no longer earning an income, you’ll need your retirement nest egg to generate a regular income and capital growth.
Bear in mind your lifestyle and health needs will change during retirement. In the more active early years you’re more likely to travel and spend money enjoying new hobbies. Then as you get older, you may need to budget more for medical bills and aged care. So you’ll need to make your savings last.
Start planning today
To start planning for your retirement, contact your financial adviser or call us on 131 267.
1 Australian Institute of Health and Welfare as of 2012. Full details at https://www.aihw.gov.au/deaths/life-expectancy/
2 Australian Government, Department of Social Services. Full details at http://www.dss.gov.au/our-responsibilities/seniors/benefits-payments/age-pension
3Association of Superannuation Funds of Australia’s Retirement Standard, December 2013. Full details at http://www.superannuation.asn.au/media-release-31-january-2014
We look at the average super balances for different age groups in Australia so you can see whether you’re on track with your super.