Unfortunately most Australians are simply not saving enough or starting young enough to give them anywhere near what they will need in retirement. Retirement planning is all about replacing your main source of income once you stop working.
Source: Garvan MLC
More than 50 percent of retired Australians rely on Government pensions and allowances as a main source of income1. But the Government Aged Pension is about half the amount that a couple need to live a comfortable lifestyle in retirement.
Retirement planning is not just about superannuation. Superannuation is one of the most effective ways of preparing and planning for your retirement, its not the only way.
Click on the graph to see a larger image
Click on the graph to see a larger image
Statistics show that to maintain a comfortable retirement, on average you will need to accumulate between 5 and 7 times your highest average salary. The key to accumulating this amount of money is to start early, seek advice from a qualified financial adviser and ensure you review your plan annually.
Strategies and structures needed for retirement are different for everyone. The one common thing is that relying on your employer’s superannuation contributions will not be enough. In most cases, it will be a combination of strategies which will eventually fund your retirement.
Retirement strategies may include:
- Paying off your residential mortgage and negative gearing from the equity of your home
- Constructing an investment plan, or a combination of investment property and long-term share portfolio
- Once your portfolio reaches a good size, setting up a self-managed super fund
- Understanding the value of salary sacrifice and making extra contributions into super
- Using spousal contributions and government co-contribution strategies
- Setting up a transition into retirement plan
Whatever strategy you choose, the key is getting sound advice and sticking to a plan. If you are nearing retirement or you are paying into superannuation and not sure if it is taking you in the right direction, then you need to speak with us.
1 ABS Australian Social Trends Report, 2009
