Nov 16, 2016


According to MLC’s Australia Today report, 77% of Australian pre-retirees who haven’t enlisted the help of financial professionals don’t feel prepared for retirement. Of the remainder, only 9% feel ‘prepared’ for retirement and only 14% consider themselves ‘somewhat prepared’ for retirement.

When Should You Worry About Retirement?

For many Australians retirement seems a long way off. We’re so busy worrying about paying off the mortgage and maintaining our standard of living now that a distant retirement isn't a pressing concern. For some individuals, it’s not even up for consideration.

This lack of retirement preparation is a symptom of a ‘living for today’ mindset that has emerged in Australia. More Australians are living pay-cheque to pay-cheque to support a more luxurious lifestyle than their parents. They’re foregoing financial planning for regular travel and entertainment and other lifestyle factors which Australians are now confusing with standards of living.

There’s little left over after our lifestyle expenses. As a result, the majority of people don't feel positive or confident about their retirement plans.

"Ignore Retirement and It Will Go Away"

Do we think if we ignore the concept of retirement planning, in favour of managing the demands of today’s lifestyle, the ‘problem’ will simply go away? At the very least, it might feel far away enough to ignore for a little while.

When you work with a financial adviser, the adviser should help you understand the importance of planning for retirement now.

What would you like to do in your retirement?

Do you picture yourself hiking a mountain, surfing, writing that book, painting that landscape, learning guitar, catching up with friends, seeing that play or developing that smartphone app? You don't have to do these things. You dream them because you want to do them.

If you’re ever going to stop working or cut back on your hours, you’re going to need a big nest egg to support your dreams and goals.

How Much Do You Need in Retirement?

So how big is your nest egg? With couples needing $58,922 per annum for a comfortable retirement and $34,064 per annum for a modest retirement, and singles needing from $23,000 to $43,000 per annum for a modest to comfortable retirement, those who aren’t prepared will face a significant shortfall. Especially if you retire at 65 and live for an additional 25 years. Keep these figures in mind as you start planning your retirement.

Women and The Young Are The Least Prepared

Australia Today reveals women are almost twice as likely to feel unprepared for retirement as men. Young people (aged 25-29) and those who live pay-cheque to pay-cheque are also more likely to feel unprepared for retirement.

For many women, career breaks to have children often mean less super and a lower annual income when they return to work. For those under the age of 30, retirement just seems too far off to worry about.

How Can a Financial Adviser Help?

The good news from Australia Today is that help from financial professionals has an encouraging impact on our financial confidence and security.

Australians engaging the help of financial professionals are more than twice as likely to feel ‘very or fairly well prepared’ for retirement than those without the help of a financial professional. They’re also 21% less likely to feel slightly or not at all prepared.

Those surveyed with financial planners or advisers are also 22% less likely to expect to rely on government support to ensure their financial security (52% with financial advisers compared with 27% without). They are also 10% less likely to rely on an inheritance to ensure financial security (77% with financial advisers compared with 67% without).

What Can You Do?

If you acknowledge that one day you’d like to stop working while still having control over your lifestyle, think about how much money you'll need each year and what that means as a lump sum. Engaging the help of financial professionals will help you put a plan in place to enjoy the lifestyle you want in retirement.

What Next?

At Calder Wealth Management, our specialist team of financial advisers will help you to avoid a financial burden. Contact us or call 08 8373 3333 to arrange a free, no obligation appointment.

Written by, Ben Calder, Private Client Adviser at Calder Wealth Management.