Retirement has been described as many things …….. ‘God’s waiting room’ / ‘The Golden Years’ / ‘All your holidays at once’……… – a more cynical view describes it as “ The winter of your life, with your savings dwindling more rapidly as the years progress…………….. “ Just like those annual holidays though, it can be $$ going in one direction – OUT. We know what a juggle managing money can be, and whilst we have income, most of us manage to pay our bills, buy a few pleasures, and save a few coins ( for a rainy day ). To picture retirement, take your mind back to your last family holiday……….( or someones you know ). At the start, full of anticipation and excitement of all the fun things planned / no routine / no boss ( or staff ) harassing, just BLISS….. Now, let’s look at the first day back at work. Most often, after reminiscing about all the fun, the thought quickly turns to $$, and the conversation goes like this “ Boy, am I glad to be back at work! / can’t wait for pay day / it was money out here and money out there / the last night we had fish and chips and it was $50………. / the money juuuuuust stretched to the last weekend ……” Sound familiar ? Well, that’s retirement – EXCEPT – there’s no going back to work after the break !!!! I remember when my father retired, and for the first time I saw FEAR in his eyes. When quizzed he explained, “If your mum and I live for 15 more years, we will be fine and we can do whatever we like. If we live for 20 or more, we are in trouble!!!!” The trouble with retirement is, we don’t know how long it will be. Professional Services firm Deloitte recently published a paper arguing that Australians were still not saving enough into super to finance a comfortable lifestyle in retirement. Deloitte said Australians needed to contribute an extra 5.5 to 7.5% of salary to super, ON TOP of existing contributions. That’s getting close to 20% of salary for the average Aussie. 20 PERCENT OF INCOME. It’s estimated that a retiree will need somewhere just short of $700,000 in a lump sum to fund a comfortable ( not lavish ) retirement lifestyle.
Two quick questions to ask yourself:
Q1. How much are you contributing per year ? ( particularly if you are self employed )
Q2. If retirement was next year – what will your lump sum balance be ?