Time is finite. Finding a balance in life could give you years back in retirement.
Retirement planning can help you invest successfully and make the most of your hard earned income and savings to ensure a comfortable and secure retirement.
Whilst many of us like what we do for a living, or even love it…and enjoy working, having to work purely for financial reasons can become exhausting over time. Working to earn every dollar is hard work. You need to give up your time for your job and pay taxes on your income. To earn cash can become hard yakka, even if you love your job and career.
The time you have from when you start work through to your retirement is what we call our human capital. We have a finite ability to earn income through work and our capacity can be reduced by the sort of work we do. The more physically demanding your day job, the less human capital you may have unless you change careers down the track. It, therefore, stands to reason, to have the financial freedom to retire well, or gradually shift down the gears with part-time work, you need to have created some wealth along the way.
According to a report by the consumer research group Canstar, only 39% of Australians think they are on track to achieve their retirement savings goals. That means 6 out of the 10 people who read this article don’t know if they will be able to have the retirement they are hoping for.
Whilst we benefit from a superannuation system which as a minimum provides some degree of lifetime savings, on average we are not saving enough. The average super balance is leaving a lot of work to do in the lead up to retirement. It is important to save more earlier.
Superannuation balances by age and gender
| Age | Men: Average account balance | Men: Median account balance | Women: Average account balance | Women: Median account balance |
| 25-29 | $25,173 | $17,495 | $21,774 | $16,956 |
| 30-34 | $51,175 | $38,764 | $42,240 | $32,904 |
| 35-39 | $83,723 | $65,220 | $66,611 | $50,108 |
| 40-44 | $121,119 | $92,303 | $92,680 | $65,840 |
| 45-49 | $165,587 | $118,686 | $122,228 | $80,303 |
| 50-54 | $214,795 | $139,444 | $157,124 | $92,671 |
Source: ASFA (Figures as of July 2019.)
To put these figures in perspective, if you lived on the average income needed for a comfortable retirement, currently, $64,771 for couples and you want to maintain capital for later needs in life or leave a legacy for your family, you might need capital of $1,295,420 to support this goal. This assumes you draw 5% per year and equalize this with a combination of income and growth to replace what you draw out. (Illustrative only and excludes CPI).
Your lifestyle and retirement plans will be unique and specific to you. How much you need to support your retirement goals will likely vary, but current data indicates, most households do not have sufficient savings at age 40 to reduce the pressure as you get older. Which will limit your opportunity to be thinking about having the financial freedom to reduce how much you must work, instead, you might be having to work harder for longer to make up for lost time.
When investing time is your best friend, the power of compounding interest, or re-investing investment earnings can be significant over the years. We encourage you to contact us and review your current pathway to retirement and discuss how you can achieve financial freedom much earlier, so you have more options for your work-life balance.
A professional financial plan can give you options. Help you make the most from your money through investment strategies that can create long-term wealth. We encourage to come and discuss how to improve your retirement, now, not just before it happens.
Agile Wealth can help you invest for income in retirement and make the most of your savings, so you have a secure, comfortable and fun retirement. Contact us today to learn more about investing in retirement.
General Advice Warning: The information in this communication is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.
