8th Nov 2011
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Superannuation shortfall solutions
Author: YourLifeChoices
Superannuation, Finance, Money, Westpac, Bank, Australian, Age, Fund, Downsizing, Segue Financial Services

Having enough money in superannuation to provide for a comfortable retirement should be high on your list of priorities, no matter what age you are.  Unfortunately however, for many people it won’t be that easy, with information provided by the Westpac Bank showing that at age 70, only 1 in 5 Australians will have any superannuation left.

While the numbers may cause quite a shock, the underlying theme has been around for a long time; a large number of Australians will not have enough money saved to enjoy a comfortable retirement.

What constitutes a ’comfortable retirement’?

So just what is a comfortable retirement?  Well, lifestyle needs are a personal thing; what’s comfortable for some may be inadequate, or even affluent, for others, depending upon what they are used to and what their goals are..

The Association of Superannuation Funds of Australia (ASFA) has attempted to define the amount of income required to live a comfortable retirement through its regularly revised ASFA Retirement Standard. (http://www.superannuation.asn.au/resources/retirement-standard)

Based on the costs of a range of household essentials, as well as leisure activities, it has arrived at the following figures:

Modest Lifestyle – Single                    $21,746 per year
Modest Lifestyle – Couple                  $31,519 per year

Comfortable Lifestyle – Single            $40,121 per year
Comfortable Lifestyle – Couple          $54,954 per year

To live a modest lifestyle, as defined by the income needed above, the maximum government Age Pension will go most of the way to meeting this target (currently $19,468.80 a year for singles and $29,354.00 a year for couples). However, it is likely major travel plans will need to be shelved, as there is not much fat left over when living off the pension.

The importance of building a retirement nest egg

If you intend to live on more than the government Age Pension, then you need to generate income from your own retirement savings, and the most tax effective way to do this is by boosting your superannuation savings before you retire.

Whilst the 9 per cent Superannuation Guarantee enables Australian workers to build a retirement nest egg, for most of us this alone is not adequate to fund a comfortable retirement. So, what can you do to get yourself on track?

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    COMMENTS

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    Pass the Ductape
    21st Jun 2012
    8:19am
    Whilst I agree that getting in early for Super is the way to go and the articles relating to Superannuation on this site are informative - for those who do not have had the opportunity to squirrel away enough before retiring - there appears little that can be done to rectity the situation....... But it's not the end of the world as often suggested.

    I fit into the late Super entry category - Super wasn't around in my day, so I'm one of those stuck in the middle - I have some, but still receive a part pension. Never-the-less I manage quite well and fulfill most of my desires - albeit for the most part - world trips are off the adgenda .

    So far, the best thing I have enjoyed in retirement, is the release of pressure from not having to fill out a tax form every year; not having to go to work every day, battling with other road users; being able to wave bye-bye to the emerging go-getters of today who see nothing wrong with trampling over everyone in their path in an effort to create unrealstic wealth for themselves, and not having to kow-tow to unsympathetic, performance based CEOs whose only interest seems to be how much extra they must squeeze out of the workers - those of them who are left after the sackings have been completed!

    Worrying for ever more about how to squeeze every last cent out of ever dollar in your Super might appeal to a few, but that kind worry will only shorten your life by five or ten years. Better to go with the flow - not try to reach for the stars - just enjoy what life you have left, as it comes.
    Financial advice can be sought in an attempt to improve the bottom line, but I've found that the money spent on obtaining advice is never recouped. Obtaining financial advice in most cases is not cheap - but it's certainly a lucrative business for the advisors themselves!


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