Newsletter Articles

Can you afford to retire?

If we could afford it many of us would retire tomorrow, whilst others can’t imagine what they would do with all the spare time. Your decision depends on your situation, work, savings and goals, but some people hope for the best instead of planning for the best. A little planning could make the world of difference come retirement.

When considering your retirement you need to consider when you can access your super and whether you qualify for the Age Pension or any other government benefits. Traditionally the retirement age for men was 65 and for women 55, however as of 2014 the age for both genders will be 65. Living on the Age Pension alone will not provide for a luxurious lifestyle, it is only intended to ensure that you do not go hungry.

This is where planning for your retirement comes into play. One rule of thumb is that you can retire comfortably on about 75% of you pre-retirement income, additionally for every $100,000 invested in your retirement will provide $5,000 per annum in income. So if your employer contributes 9% of your salary per annum into your superannuation fund, the question remains do you need to save more?

Bill is 55, and by the time he is 65 wishes to contribute $100,000 into his superannuation. In order to achieve this goal Bill will have to put aside $7,740 a year for the next ten years. Maxine is 35 and also wishes to contribute an extra $100,000 into her super, for this goal to be attainable she must put aside $1,290 per annum. (Both examples calculated on a 6%pa investment earning rate.)

Obviously your retirement plan will depend of the lifestyle you require, the savings you accumulate and the age at which you retire. Nevertheless it is important to take control of your retirement through early planning.