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Tuesday, February 20 2018

6 out of 10 Australians believe they will fall short of the amount of money needed to live a comfortable retirement.

Are you one of them? 

These 2 charts below will help you find out.

 

STEP 1 - Work out how much super will you end up with?
 



The above chart estimates your predicted Super balance by the time you retire based on a long term average growth rate of 6%.

For example if you currently had a Super balance of $200,000 and had 20 years until retirement your final Super balance would be $641,427.

So what sort of income would that give you?...Let's go to the second chart

STEP 2 - How much do you need in your retirement fund to earn a certain income?
 

The above chart shows the amount of investment assets less any debt you would need to hold to receive a certain income in retirment based on acheiving a 4.5% return.

The chart also allows for the impact of inflation as $1million today is not going to be worth $1 million in 20 years time.

For example if you wanted an income of $70,000 by the time you retire in 20 years time you would need $2.72 million in investment assets.

How much income do you need in retirement? A general rule of thumb is that to maintain you current lifestyle in retirement you would need an income of approximately 70% of your annual income today. So if you were earning $100,000 today you would need $70,000 in retirement.

In 20 years time if your Super was $641,000 you would earn a measely $16,500 a year.

Which means if you want to earn $70,000 you need to build an extra $2.086 million into your retirment fund over the next 20 years. Or to think of it another way - you need to add $104,000 every year for the next 20 years.

Something tells me salary sacrificing an extra $100 a week into super isn't going to get you there.

I understand most Australians are fearful about investment and taking risk and what could go wrong etc etc but how is doing nothing less of a risk or less scary?
 
You can ignore the problem but it won't go away. And delaying action will only make the problem bigger.

If you would like to do something about it then Click here to Book in for a FREE telephone appointment with me and we can talk about the steps you can take to start tackling it.

I look forward to talking with you

Greg Carroll
07 3849 9822
MORE THAN ACCOUNTANTS
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Posted by: Greg Carroll AT 12:35 am   |  Permalink   |  Email