I have news which is enough to send shivers down Gen X andY’s spine. Baby Boomers are at least 4-6 times short of the amount needed for decent post-retirement living. So does it send shivers? Not even the mildest one. Young people think they will never get old and that retirement planning is not something they should spend their time and money on.
Both men and women are short on maximum age pension
This is unfortunate because by the time the negligence begins to sting, there is no way back. An average male is expected to live 23 years in retirement, while an average female — owing to higher life expectancy — is expected to live 26 years in retirement. The maximum age pension standing at $31,000 is almost $20,000 in deficit of the amount required for daily post-retirement sustenance. Here, I am not even adding mortgage liability, rental payouts, and children’s education.
Retirement planning is crucial
What am I driving at? The situation can turn bleak unless a few steps are taken expediently. As a rule, people should start planning for retirement at least 30 years in advance and review the retirement strategy a good 10 years before the day of retirement.
How will you be placed after retirement?
Figure out if you will be downsizing and if you will be looking for reverse mortgage options, granny homes, or dual occupancy. How long will your children be staying with you? Will you still be working part-time after retirement? It is questions like these that you need to answer.
I also recommend you find out where you will be placed with your mortgage liability at the time of your retirement.
I have always been advising my clients to get themselves a combination of investments. They may need savings, bonds, income generating assets like rental returns, and dividends from shares apart from growth assets.
Talking of residential property acquisition, your Superannuation can come in handy because it can ease out your tax liabilities a great deal.
If you are planning to purchase a property via your Super, I will be glad to advise on the subject.