Will you have enough income in retirement?

Your retirement is a time where you should be able to sit back and enjoy the life you’ve worked so hard for, and it’s never too early to start planning for it.

Ideally, we would all like to retire with the peace-of-mind that we have sufficient funds for our whole life post-career, including enough for your plans and interests along the way, whether this be art and craft supplies, new golf clubs, a reliable car to help look after the grandkids or the caravan for your long awaited road trips.

With all this in mind, you probably want to place a dollar figure on how much you need to save now, to be able to retire comfortably. That number is your individual number as it will be based on your individual circumstances – where and how you want to live, your assets and debts, whether you have dependants or not and the type of lifestyle you live. It will also change based on the type of investments you hold and the returns on your investments.

The ‘Retirement Standard’ guide by the Association of Superannuation Funds of Australia (ASFA) outlines how much you should be forecasting to spend:

• A couple of about 65 years of age – $40,194 p.a. is needed to live modestly.
• A couple of about 65 years of age – $61,786 p.a. is needed to live comfortably.
• For singles of about 65 years of age – $27,913 p.a. is needed to live modestly.
• For singles of about 65 years of age – $43,787 p.a. I needed to live comfortably. ¹

What are your potential sources of income?

It’s not only hoping that you have accumulated sufficient assets during your working life, you need to also consider which investment vehicle or combination of investment vehicles will produce your required income at a level or risk you are comfortable with. Popular investment options include:

• Superannuation income streams i.e. pensions (can be held in an Industry fund, Retail fund or SMSF): can generate income and growth through investments held.
• Investment accounts (which can hold managed funds, direct shares, ETFs, and cash): can also generate income and growth through investments held, except these assets are owned outside and separate to your superannuation.
• Cash products such as bank accounts and term deposits: can yield income through interest.
• Investment properties: can generate income via rent received.
• Annuities: can yield income by investing a lump sum to receive a guaranteed income for a pre-determined number of years.
• Centrelink Age Pension: depending on your age, assets, and income you may be entitled to receive a regular partial or full Age Pension from the government.
• Department of Veterans’ Affairs: like the Centrelink Age Pension, Armed Forces veterans may be entitled to receive a means-tested income support pension.
• Pension Subsidies: although technically not an income, you may be entitled to a Pensioner Concession Card or Commonwealth Seniors Health Card which assists with certain living costs by allowing access to specific goods and services at a concessional rate (e.g. medical appointments, PBS medication, travel, rates, motor vehicle registration, etc).

Whilst these options may seem overwhelming, engaging the services of a financial adviser can help to create a strategy to maximise your retirement income so that you can live your best life.

If you are ready to enjoy the retirement you deserve, book an initial appointment with one of our Retirement Advice Specialists. We have offices located at Newcastle – The Junction (NFPG), Central Coast – Erina (CCFPG), and Sydney CBD (SWA).

REFERENCES:

^[1] https://www.superannuation.asn.au/resources/retirement-standard as at September 2019