**Please note: this is general advice and you should see a registered Financial Advisor for specific advice.
Our parents were able to pay off their house, save some money, get a decent interest rate that saw their money grow and then go onto the pension and live a comfortable life.
However, that is not the case now.
Can’t I just save money for retirement? Yes, you can put aside money into savings. However, we all know that interest rates for deposits are very low, so you don’t see much growth in your savings.(However, it has been great for those with Home Loans to pay off.)
What about living on the pension?According to a report in 2020 by the Melbourne Institute (*Ref 1) the Australian Poverty Line for a single person is $455 per week. The Services Australia website (**Ref 2) says that the maximum amount a single person on the Age Pension (with Energy and Pension Supplement) can receive is 952.70 per fortnight (or $476.35 per week). We are not in the same situation as our parents, if we want a comfortable lifestyle, we need to look beyond the Age Pension.
What about my Superannuation?What will I need to live on? The Association of Superannuation Funds of Australia (ASFA)(***Ref 3) has various reports that can give you an idea on how much you will need per year to have a modest life or a comfortable life. They recommend for a single person to live a “comfortable” lifestyle you would need $545,000 in retirement funds, own your own house and be reasonably healthy.
According to the Association of Superannuation Funds of Australia, the average amount people have in their superannuation funds arefor men aged 55-64 is $332,700 and women aged 55-64 is $245,100.
So, if you are sitting on the average amount, you may not be able to have “comfortable” lifestyle in retirement that you would like.
So, what should you do? Pay off your mortgage as quickly as possible? Boost your superannuation?
The governments Money Smart website https://moneysmart.gov.au/ has some great ideas, resources and advice.
Here at Wealth Connections Australia, we can refer you to:
- reputable companies that can talk to you about your home loan rate and organise re-financing if they can offer you a better rate.
- reliable companies that can discuss your utility bills (electricity and gas) and recommend if there is another company that can offer you a better rate.
- one of several companies that can talk to you about investment properties and how they may suit your retirement strategy.
- companies that can discuss if a Self-Managed Superannuation Fund would be appropriate for you.
Please get in touch with us and we can refer you to the help you need.
***Reference 3: The Association of Superannuation Funds of Australia (ASFA) has been operating since 1962 and is the peak policy, research and advocacy body for Australia’s superannuation industry.https://www.superannuation.asn.au/resources/superannuation-statistics