Survey Claims 80% of Australian Households Don’t Think They Have Enough Super to Retire On

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According to a July survey by ING Direct, 80% of Australian households do not think their super funds will provide them with enough income to finance their retirement. Unfortunately, they are probably right. A recent report by the Association of Superannuation Funds of Australia estimated that retirees need $55,000 a year to live comfortably. Custom Wealth Solutions explains how clients could have enough super fund to provide them with financial security when they retire.

Custom Wealth Solutions

Custom Wealth Solutions

Retirement planning is complex and it is important to have a thorough understanding of how super works, so you can be prepared... the best investments for your particular risk-tolerance level and whether to choose a managed or self-managed super fund.

In the world of super funds, size counts. It counts a lot. If a retiree is only relying on his employer’s contributions, he may be in for a nasty surprise. The first step in preparing for retirement is estimating how much a retiree is likely to need to live once he retires. Three main factors will determine target income: longevity, lifestyle and medical costs.

According to the Association of Superannuation Funds of Australia, a couple with a modest lifestyle with a life expectancy of 85 will need $31,643 a year to make ends meet. In order to earn an income of $31,643 a year, they will need a lump sum of $412,000 in their super fund when they retire. On the other hand, if a couple wants to live a more comfortable lifestyle, they will need $55,080 a year. That will require a balance of $716,000 in their super.

Another method to estimate the needed income to keep up with the lifestyle one currently has is to allow for 67% of the current income. For example, if one makes $100,000 now and don’t want retirement to cramp his style, he will need an income of $67,000.

“It is never too early to start planning for your retirement,” said Chris Appleyard, chief analyst for Custom Wealth Solutions.

Retirement planning is complex and it is important to have a thorough understanding of how super works, so you can be prepared. This includes being familiar with taxation laws, the best investments for your particular risk-tolerance level and whether to choose a managed or self-managed super fund.”

The statistics published in the ING Direct survey mentioned above show that a thorough understanding of how superannuation works influences people’s confidence in the performance of their super funds. The report indicated that 39% of households that claimed a thorough understanding of their super were very confident it would be sufficient to provide them with a financially secure retirement. In contrast, only 13% among those with no idea about their super funds felt very confident about their retirement funds.

Experts stressed that retirement without a suitable income is not fun. All workers can take an active role in their retirement by planning what income they will need from their super funds and ensuring their current contributions are appropriate. Experts advised to talk to experienced finance professionals and receive the right help needed to maximise the income one will receive when retire comes.

Custom Wealth Solutions is the industry leader in providing extensive and tailored financial advice on gearing and wealth creation strategies, estate planning, and retirement planning. Their friendly and professional financial advisors are willing to listen and offer sound advice on your financial needs.

If you want to have a phone consultation with a CWS financial planner, dial 1300 001 297 or check out their website http://www.customwealth.com.au/about for more information.

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Chris Appleyard
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