How much do you need to retire.

If you are over the age of 50, chances are you have adopted a ‘set and forget’ approach to your later years and are only now starting to consider what your retirement may look like.

Also, given the initial timing of the superannuation reforms, it is likely that you have only accrued superannuation for a portion of your work life and your balance reflects those circumstances.

While most people retire between the ages of 60 to 70, they miss a large opportunity in the preceding 10 years to maximize their superannuation balance. Anecdotally, we have largely seen people use several approaches for retirement, ranging from:

        1. investing heavily in a property portfolio (including still maintaining gearing at retirement);
        2. relying on the age pension after gifting any assets available to their children; or
        3. holding a cash balance, which they draw on over time, as they feel the market is too volatile.

These approaches generally do not maximise retirement income, nor do they ensure that your investments will last the duration of your retirement life. Problems can arise with these strategies when your income is reduced due to either debt repayments or tenancy risk (in the case of option 1), your cash balance being significantly dwindled due to lower interest rates (option 3) or you finding that the age pension cannot support a reasonable retirement or leave you in a suitable position to deal with your future aged care requirements (option 2).

In particular, the traditional age pension is largely becoming an unsuitable sole strategy for retirement if you wish to live a comfortable life. Noting that the current age pension for a single person is $24,770.20 per annum or $37,341.20 per annum for a couple (assuming they own their home outright), recent figures detailing with a modest and comfortable lifestyle in retirement (at age 65 and 85) are significantly higher per the below (source – ASFA 2021):

It is important to note that when considering the above figures, you also need to factor in the impact of:

– tax on your investments, especially when placed outside of superannuation;
– personal items such as assistance from or for children and grandchildren; and
– life expectancies, which have also increased significantly, meaning further mileage from the same capital needs to occur.

If you are concerned that you possibly will not have enough income to live comfortably in retirement, it is critical that you contact me to discuss your needs further. Professional retirement advice will provide you with the opportunity to prepare for retirement, and have the peace of mind that comes from having a plan in place that seeks to ensure that you can live the life you want to live in your retirement.

Simaco Financial Planning, the financial planning division of our business, specialises in assisting clients in preparing for retirement through maximising superannuation contributions, available investments, and your super balance to allow for a longer and more comfortable retirement, as well taking full advantage of the tax concessions available.

If you wish to discuss how Simaco Financial Planning can help you to plan for the retirement life that you want to live, I encourage you to give the office a call on (02) 9707 4470, and I would love to discuss further.

Stephen George Nikolovski

Authorised Representative & Financial Planner

C.A. B.Comm, DFP
Simaco Financial Advice is the trading name of Direct Financial Advice Pty Ltd which is the trustee of the Simaco Financial Advice Unit Trust ABN 91 753 408 234.  This company and Stephen George Nikolovski are Authorised Representatives of Lifespan Financial Planning Pty Ltd ABN 23 065 921 735 Australian Financial Services Licence 229892.
Stephen Nikolovski is an accredited broker and operates through Simaco Finance, the trading name of Direct Finance Solutions Pty Ltd.
Stephen George Nikolovski is a MFAA Approved Broker (number 386328) and is a credit representative (number 500383) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit License 391237).
Disclaimer: The above is merely general commentary and is not a statement of fact or assertion of expected outcomes.  It does not consider your personal circumstances.  Please consider whether any proposed credit contract and what structure of loan (e.g. fixed or variable etc.) is appropriate for you and read any relevant disclosure statements and/or speak to an appropriately qualified legal professional / seek financial advice before proceeding with any course of action.  If you wish to discuss your personal circumstances further, please again feel free to contact this office.
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