Most people nearing retirement age in Australia do not have sufficient funds in their superannuation to retire comfortably. This is a huge problem, how much do you need in your super to retire without concern?
The Big Issue For Baby Boomers
Surprisingly, 74% of Australian baby boomers are unsure how much money they will need in retirement, many think that the age pension will be sufficient.
The Australian Bureau of Statistics (ABS) state that there are almost three million over 50’s working, this equates to 28% of the overall national workforce.
The majority of over 50’s nearing retirement age will have to consider alternative funding sources because most will not have sufficient funds to retire comfortably. This is largely due to the fact that the broad-based superannuation system only came into existence in 1992.
Many over 50’s are recognising the importance of taking control of their financial future by investing in property.
How Much Do You Need To Retire Comfortably?
Some financial experts state that retirees would need to have at least $1,000,000 in superannuation when they retire to live moderately.
However, if you want to live a comfortable lifestyle, you would need significantly more than $1,000,000.
Opinions differ when it comes to pinning down an estimated lump sum needed to retire comfortably with some financial professionals stating that a couple needs to generate a yearly income of at least $60,604, they need to have at least $575,000 minimum lump sum in their super to live comfortably, investment returns should be at least 5% per year.
Coupled with PART Age Pension, a couple should be able to live comfortably.
A single person would need to earn at least $42,953 per year, with a super lump sum of $505,000 with investment returns of 5% per year.
Millions of Australians will need to seek alternative income sources to fund their retirement, only 10% of Australians have super accounts with more than $100,000 in them.
The Association of Superannuation Funds of Australia state that based on the average superannuation balance and current average income of 35-44 year olds, the estimated superannuation payment for a male would be $183,000. A female would receive an estimated $93,000.
Bearing this in mind, how much money do you need to retire without worrying about your finances?
The lifestyle that you choose to lead will determine how much you are going to need. If you want to live extravagantly, you will obviously need more than someone who wishes to live a simple lifestyle.
If you want to live comfortably, it is vital that you start planning your financial future now.
Taking the current information regarding superannuation into consideration, super alone will not provide you with enough funds to enable you to retire comfortably. Therefore, you should start looking into other ways of boosting your income, property investment is a good place to start.
How To Boost Your Finances For Retirement
Spend Less Than You Earn
If you want to become financially free for your retirement, you will need to spend less than you earn. Take a look at your outgoings and expenses and find ways of cutting down on spending.
Invest the money you save wisely, most Australians will earn approximately $4-5 million throughout their working life however, the majority will retire on a very low retirement income. The fundamental difference between someone who retires wealthy and someone who retires poor is the amount they save and invest.
Reinvest the investment income, build wealth by creating compound growth. Your earnings will not be sufficient to build financial independence.
Keep investing and reinvesting to build capital growth and passive income that will work for you when you retire.