Despite Australia’s incredibly strong superannuation savings system, just one in six Australians feel confident they’re on track to retire comfortably. Even more concerning, around 40 per cent of working Australians have never received any financial advice to help them prepare for retirement. How prepared are you for retirement? And how much will you need?
Financially unprepared
Results from a survey commissioned by financial advisers MLC, show that Australians feel overwhelmingly unprepared for retirement amidst government tinkering with the superannuation system.
Out of the more than 2,000 Australians surveyed, around two-thirds believe they’re financially unprepared for retirement, with young people and women the most likely to feel unprepared.
Despite fears about their future, most of those surveyed said they would put a $50,000 windfall into savings, their mortgage or use it for a holiday, rather than add it to a retirement fund.
No financial advice
Around 40 per cent of Australians have never received financial advice about retirement, and most believe they will fund their retirement from properties, according to the Future of Retirement report which compares data from 17 countries.
HSBC head of wealth, Scott Ellis, stressed that some people had already realised that saving may not be enough to adequately prepare for retirement, and had decided to plan for alternate sources of income like property.
But income from property sales combined with savings and fund portfolios may still not be enough, and nearly 31 per cent of working age Australians expect to continue working into their retirement age.
"Planning for retirement can appear daunting although not as potentially daunting as a retirement that has not been planned," Ellis said.
"The best way to alleviate these concerns is to start early, seek professional advice and be prepared for the ups and downs of funding your retirement."
How much super will be enough?
The answer to this question depends largely on your own circumstances and expectations. To help you answer this question for yourself, consider the following:
- How much are you hoping to spend in retirement?
- How much can you save?
- How much investment risk do you want to take?
- When are you planning to retire?
- How much do you want to leave behind?
A standard benchmark for singles and couples to live modestly and comfortably in retirement has been published by the Association of Superannuation Funds of Australia. At present the ASFA suggests a couple would need around $34,223 to live modestly and around $59,236 to live comfortably.
Plan ahead for your future
It makes sense to start early when planning for your retirement. Finding a balance between spending today and ensuring you have enough saved for tomorrow is important. If you’d like advice about how much you’ll need to comfortably retire, talk to a Mortgage Express broker and let’s plan ahead for your future.
