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The age that Australians retire is increasing. However, there is a disparity between when many people expect they’ll retire and when they can actually afford to do so. 

When should you start planning retirement?

It’s never too early to start thinking about and planning for retirement. Various research has indicated that many Australians are approaching retirement age significantly underprepared.

Despite over 30 years of the compulsory Superannuation Guarantee, a recent Findex study showed that two out of three Australians are concerned they won’t have enough money to last through retirement. 

According to Findex CO-CEO Matt Games, “This paints the picture that most Aussies have adopted a ‘kick it down the road’ mentality to retirement. But when the time eventually comes, they’re faced with the reality that their existing savings and superannuation balance are insufficient in this economic climate.”

How much do you need?

The Association of Superannuation Funds of Australia Retirement Standard indicates that a retiree today needs upwards of AUD$500,000 in their super balance. This sits well above the national average of AUD$356,000 and $288,000 for men and women respectively in their early 60s. 

Evidently, the earlier you can start planning and setting yourself up for retirement the better.

What is your plan?

There are a few key questions to ask yourself in order to prepare for retirement. These are:

  • When can you retire?

Many people opt to retire around the age they qualify to receive the Government Age Pension, which is currently 67 but is likely to be pushed to 70 in years to come. Ask yourself when you would ideally like to retire. Then look at whether you’ll be able to afford to retire at that age.

  • How long could your retirement last?

We don’t like to think about when we’re going to die but it’s obviously a key factor when considering retirement. There’s no crystal ball, but you can look at average life expectancies. For example, if your dream is to retire at 55 years old, you need to factor in that you may have upwards of 30 years of expenses to pay for.

  • What will your retirement cost?

This is ultimately a lifestyle question. What kind of retirement do you dream of? For instance, if you want to travel and eat out lots, then you’ll need to factor this into your budgeting. As a general rule of thumb, you will need between two-thirds and 80% of your pre-retirement income.

  • Will you be a self-funded retiree?

A self-funded retiree supports their own retirement without assistance. If you’re hoping to receive the pension, then you need to research whether you will actually be eligible for it.

It’s important to do your due diligence when tackling these key questions and planning for your retirement. You may want to consider using a financial advisor to help guide you. They’re experts who may present ideas and options that you haven’t considered yet. 

Not everything goes to plan in life, however as the old adage goes – “by failing to prepare, you are preparing to fail”. The more planning and thinking you can give to your retirement the better off you’ll be.