An interesting research says that the SMSF trustees are likely to outlive an average Australian by 2.5 years (female) and 3.2 (male) years. While higher life expectancy may be a cause to cheer, it is also important to live out one’s age in fine fashion. This, however, is not possible unless the SMSF trustees have enough money in their kitty to tackle the post-retirement years.
Higher life expectancy
If you look at the data at hand, one out of every 10 male SMSF trustees will reach the age of 98 and the same percentage of women will make it to 99. So, are we not then looking at couples who should have a strong retirement plan handy? Something like $1.5 million is required as the starting balance to live on $80,000 a year after retirement. If you want things spread a little more lavishly, you will require in excess of $2 million. And here we are talking about $100,000 a year.
Baby Boomers await uncertain fate
Baby Boomers will be better off waking up to the inevitability of late years and retirement. Rather than beginning to plan a little late in the day they should work from a much earlier time. Consolidating debt under one umbrella and reducing them strategically is a nice start. Creditworthiness is a good thing but rather than banking on the plastic money, Baby Boomers should make an effort to increase their propensity towards cash spending.
Portfolio diversification
Diversification of portfolio is a great thought. Many have gained by investing in diverse range of products like stocks, bonds, and collectibles and of course one’s Super. Such an array gives you the best chance to hedge one area of investment with another. To cut the story short, a nice mix of growth investments and income-generating investments is the key.
Baby Boomers are beset with the possibility of working right into their 70s and this is because a majority of them are finding themselves woefully short of the money they may need post retirement (sometimes, 6 times shorter than required).
Caveat for the younger generation
In fact, a food for thought for the younger generation- Why to face the music the same way as the Baby Boomers generation? Why not to begin retirement planning early. I know you are probably a long way away from that time but are you moving towards it any slower than 60 minutes per hour? Think!
How are you gearing up for your retired life?
