In the next 20 years potentially over 100,000 more people will retire each year. In the last financial year alone the number of people over 65 years of age had increased by over 100,000.[1] Further, the Intergenerational Report released by the Federal government in 2015, estimates that the number of Australians over 65 will double by 2055.[2]
Despite the fact that very large numbers of people will retire in the not too distant future, many people are underestimating how much money they will need for their retirement years. With a benchmark of almost $60,000 per year required for a couple who own their own home to live a comfortable retirement[3] only around half of pre-retirees have started thinking seriously about retirement before reaching 55 years of age.[4]
I believe that starting your retirement planning early can help you make the most of your savings and potentially reduce your reliance on the Age Pension, so you can live the retirement of your dreams. Currently on average people are waiting until just seven years from retirement to begin planning.[5] Planning for longevity is particularly important with life expectancies predicted to increase from 91.1 to 95.1 years for men and 93.6 to 96.6 years for women by 2054/55. Further, it is expected there will be over 40,000 people living to over 100 years of age by 2054/55[6].
I hope that the Intergenerational Report will be the catalyst for pre-retirees to seek professional financial advice about their retirement. Our ageing population and a massive reduction in the number of working age people per every person over 65 means more people are or will be living in retirement with greater demands on fewer taxpayers (currently there are 4.5 working Australians supporting 1 person over 65, with this expected to decrease to 2.7 in 2055, compared to 7.3 in 1975[7]). This demographic trend will place enormous pressure on Australia’s Aged Care and Healthcare spending highlighting the importance of planning a self-sufficient retirement.
Retirement is so much more than just superannuation and there are a number of retirement strategies that can be implemented to make the most of your circumstances and retirement wishes. I can help you and your family to articulate what you would like your retirement lifestyle to look like and whether or not you have the cash flow or assets required to fund your desired lifestyle within your desired timeframe. Starting your planning early is crucial in enabling you to implement strategies now to work towards your overall financial goals.
A retirement plan should consider both your Estate Plan, especially for farming families handing over the reins to others in the family, as well as your Aged Care plan. My role is to act as your central coordinator, taking an overarching view of your entire financial life and providing advice and insights about how the choices you make in the short-term could affect your financial freedom in the long-term.
For more information to help you create a Retirement Plan that is compatible within your overall Financial Plan, contact me on 0438 946 638 or email phillip@financialservicessa.com.au
[1] ABS 3101.0 Australian Demographics Statistics June 2014
[2] http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary
[3] AFSA Retirement Standard www.superannuation.asn.au
[4] REST – The Journey Begins Report www.rest.com.au
[5] Colonial First State Presentation – Understanding Baby Boomers https://prezi.com/ruiiohivo6bt/understanding-the-baby-boomers/?utm_campaign=share&utm_medium=copy Slide 91
[6] http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary
[7] http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary
Phillip Dibben is a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
This information (including taxation) does not consider your personal circumstances and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.