Increasingly it is becoming clear that many ordinary Australians have inflated expectations when it comes to their ideals of the lifestyle they would like to lead when they retire. Given this, it is surprising how few seek professional advice in an effort to help them reach their retirement goals.
In a report commissioned recently by State Street, it was found that 6 out of 10 Aussies have an expectation that their standard of living won’t change when they retire, when in fact most people will find themselves in a position of having significantly less to live on.
Whilst lifestyle is a very personal thing – one person’s luxury is a modest life for another – it would seem that for many the expectation for being able to choose their retirement lifestyle quite often comes with a sting in the tale once the reality of their financial position becomes evident.
In a recent article* on State Street’s report in The Age newspaper, State Street head of portfolio strategy Asia Pacific Jonathan Shead said:
“The industry’s reputation has taken a battering in the press in recent times deterring some people from seeking out advice, but the evidence clearly shows that most people who have actually received advice find it very worthwhile.”
“Many people expected their post-retirement income to be as high as $982 a week, which is significantly higher than the $767 a week a week that the Association of Super Funds of Australia calculates as the standard required for a comfortable lifestyle and more than double the ASFA standard of $443 a week to fund a modest lifestyle”.
In the end, choosing a lifestyle should be simple – choose to live the life you can afford. If you want to live a comfortable life in retirement, you need to have a clear vision about what that type of life may look like. And with the average life expectancy increasing, so does the amount of superannuation the average person will need for their retirement.
In our recent blog post “how much is enough to retire?” we reviewed the Australian Superannuation Funds of Australia’s Retirement Standard, outlining their estimates on how much individuals and couples need, in reality, to retire comfortably.
But….don’t make the mistake of thinking that a retirement plan and a financial plan are the same thing.
Successful retirement doesn’t come with a price tag and your retirement plan should NOT include having to account for something as significant as financial stress. It is vital that you have a clear understanding of the financial resources you have and the evolving demands that you will have on these resources as you retire and age.
Retirement income planning provides you with more options to pick the type of retirement lifestyle you dream of. Taking into consideration changes in life circumstances, how financial commitments change over time and current assets all play into your overall financial plan towards retirement.
Asking for financial advice can help identify investment strategies and assist with navigating the complexities of the tax system.
If you want to have a chat about what your retirement dream looks like and how to get there, give me a call and let’s see how we can make that a reality.