Will you have enough money in retirement?
There will be a significant shortfall in retirement savings for many unless superannuation fees are cut back, employees stay working longer and tax concessions are changed. The superannuation system has been continually changed since its inception in 1992.
Industry experts are saying, that people must get more involved and look at self-funding their retirement.
The Federal Government has just released the fourth Intergenerational Report – a five-yearly review on how Australia’s population size and age profile may impact economic growth, the workforce and public finances over the next 40 years – and warned that changes are needed with the super monolith to ensure its viability in the years to come.
The report found that Australians will live longer resulting in employees having to stay in the workforce longer. It was found that people born after 2055 are expected to live to at least 95 which means they will need more money in retirement. The retirement age in Australia is due to rise to 70 in 2035 and therefore we will need employers willing to employee mature-age workers. But more importantly, we will need to have the jobs available for those workers.
Whilst the super system aims to have more Australians self-reliant on their own retirement savings once they stop working, there needs to be a better tax regime to make sure the aged pension and the super system are working better in conjunction in the future. Industry experts are however saying, “It’s inevitable the government will be looking at introducing taxes on super pensions.” Not the sort of news retirees would like to hear.
The report also found that the government was considering how to improve ways super savings transform into retirement income streams. Australians often focus on the lump sum at the end of their working life and most people don’t really know how much they will need. The Australian Superannuation Funds of Australia’s retirement standard benchmark is that for a couple looking to achieve a comfortable retirement they need $58,364 a year, whilst those seeking a modest retirement lifestyle would need $33,766 a year.
Time to Plan
The time to plan to make sure that you have sufficient funds is always sooner than later and some would say that you must start planning the day you start your working career. Life changes can cause all sorts of planning issues and upsets to your financial position. So if you focus early and manage your money wisely the outcome will be a much better one. Just relying on superannuation, however, to give you a good retirement is now considered unwise due to the number of years we will be living and the various new taxes that governments are considering that will affect our retirement funds.
Take charge of your own financial future.
Investing in good growth assets such as residential homes starting as soon as you can is fast becoming an acceptable strategy for planning an early retirement by building wealth outside of your superannuation funds.
The rules are changing and you may not be able to retire and access your super money until you are much older.
Managing your own wealth creation strategy is always an important thing to consider and is becoming more and more apparent as the years roll by.
If you too are concerned about having enough in retirement, then give me a call on 0412 323438 or contact me via Email Robert