Are you confident your money will last?

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Are you ready for retirement? Are you confident your money will last?

Over the past 18 years, retirement website YourLifeChoices has surveyed its membership (currently 250,000) on all aspects of retirement and retirement affordability. Many things have changed in that time, but the one constant is the fear of running out of money.

According to YourLifeChoices recent Retirement Income and Financial Literacy Survey, which garnered more than 5000 responses, 48 per cent of respondents were concerned that their savings would not last in retirement. Add in the indisputable evidence that we are living longer, and that fear is magnified.

When we asked our members about the single greatest challenge to living within their current income, 35 per cent cited the costs of health insurance and healthcare. And the latest cost of living increases in the June quarter showed no respite, with health costs up 1.9 per cent compared with the March quarter and 3.4 per cent compared with the June quarter in 2017.

A Monash University-CSIRO report in 2016 estimates that as a result of an ageing population, health expenditure per person will rise from $7439 in 2015 to $9594 in 2035 – an increase in total expenditure from $166 billion to $320 billion or an average annual growth of 3.33 per cent.

Personal health costs are an issue for many retirees. In the financial literacy survey71 per cent of respondents said they had private health insurance. However, the increasing cost of private cover means that some are struggling to maintain their policies.

While health costs are the major concern for our members, they are closely followed by housing costs, with 28 per cent citing this retirement expense as one of their greatest challenges.

The ongoing debate about lifting the superannuation preservation age is also a major concern for those approaching retirement.

Currently, Australians who are retired are able to access their super as early as 55 for anyone born before 1 July 1960, progressively extending to 60 for those born on or after 1 July 1964. There are, however, moves afoot to increase the preservation age in an attempt to keep people in the workforce for longer.

Lack of action could be one of the biggest mistakes older Australians make when they start planning their transition from full-time work.

For the 52 per cent of survey respondents who said they were either confident or very confident about their long-term future finances, could that belief work against them?

Could self-confidence – and perhaps a distrust of the financial services sector, given the events that prompted the banking royal commission and the subsequent revelations – mean that they are missing out on maximising their income and savings? Could it sometimes be a case of not knowing what you don’t know?

The Australian Securities and Investment Commission (ASIC) says: “Advisers mostly add value by helping you sort out your financial goals and working with you to develop a plan to achieve them over time.

“Most importantly, working with an adviser will help you turn thought into action, especially if you tend to put things off.”

Joe Stephan, director at Stephan Independent Advisory, saysthatclients often remark they are not aware that certain strategies exist.

He said financial planners regularly reviewed plans to adjust the impact that outside forces (legislative and market changes) could have on them.

“If you choose to manage your own affairs,” he says, “how much time will you spend reviewing all aspects of your strategies? How accurate, non-conflicted or detailed would your reviews be? How effective and confident will you really be with your own review?”

While the previously cited survey shows that most of our members wished they had saved more, many feel that the ability to fund themselves in retirement was denied to them by external factors over which they had no control: health, fragmented work history, lack of income due to caring for others, work in low-paid industries and other such factors associated with life-course disadvantage.

Those close to retirement can still improve their financial situation and maximise their super benefits by:

  • increasing the amount they contribute
  • consolidating their super if in more than one fund
  • reviewing the options/ways in which their super is invested.

Pre-retirees can also consider investment options outside super to assess whether they are in the most tax-effective environment.

YourLifeChoicesestimates of annual expenditure after the June quarter cost-of-living increases are $74,813 for Affluent Couples (privately funded retirees who own their home). To achieve this level of income – on current cash rates of 2.5 per cent (i.e. not from investment in the sharemarket or property) – they would need almost $3 million in savings.

This article originally appeared in Cuffelinks.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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Written by Ben


Total Comments: 31
  1. 0

    The problem with raising the preservation age is that with so many people out of work before pension age the need access to their super.

    • 0

      I couldn’t have worked in my previous job till 67 anyway. Maybe sitting behind a desk and answering a few phone calls could be done all the way to 85 but is not what most people are engaged in doing their jobs. And not all of us can be pollies and bank managers.

    • 0

      Cowboy Jim even if an 85 year old can manage the phone until 85 the cruisie jobs are all filled long before any elderly worker gets a look in.

  2. 0

    Every time I hear the term we are living longer I wonder where this indisputable evidence is coming from. In the last five years my wife and I have lost not only parents but several friends the same age as us (62&64) Several more friends our age have been diagnosed with cancer and leukaemia. I often wonder if its just the gov doing a snow job again.

    • 0

      People are on average living longer, however it’s mostly due to drugs and there’s no mention of quality of life for those people, who wants to live another 5 years in an aged care home with little ability to enjoy life.
      Like you I know of many people who are in their 60s and not well, and I keep thinking to myself how the hell are people like this meant to keep working, they barely manage to get through the day.

    • 0

      The next generations coming through will live longer due to new drugs and probably cures to diseases To be honest none of us know how long we will live. Learn to treasure each day as it your last. I heard of a woman who just died at the age of 112,

    • 0

      I have no wish to live one day longer if it entails being warehoused in one of those awful aged care facilities. It would be the same as telling a battery hen that the good news is you can exist in misery for an extra year.
      Yes, let’s see some evidence of an overall increase in the quality of life before we start celebrating. Or at least let’s see evidence that the quality of our lives has not deteriorated.
      Let’s see the data on quality of life, it has to be there, wonder why the government doesn’t publish it at the same time they tell us how good it is that we are living longer. Might be something to do with trying to increase votes.

    • 0

      Agree PS. I cant think of anything worse than having to starve oneself to death as that is the only option we now have.

  3. 0

    The answer to this question can only be given if the answer to the more important question is known. How long will I live.
    In our case, the return on our super is higher than the compulsory withdrawal so unless we take out a lump sum, it should last. Oh for a crystal ball!

  4. 0

    Absolutely. The property boom made the value of $1m surreally diminished.
    So many utilities have sky rocketing increases as opposed to my bank sending me a letter to say my account that was earning 2.9% 4 years ago is now earning 1%!
    Can’t money in the bank at least keep a conversion rate that remains constant with inflation.

  5. 0

    I have enough but wouldnt mind some more.
    Another $3 million would come in handy to upgrade the house, and a few toys

  6. 0

    This article talks about current membership of Yourlifechoices being 250,000. Yet no mention is made in the article of the large number of retirees struggling now to survive at or below the poverty line. The ones in most need and most vulnerable.

    • 0

      No one on OAP is below the poverty line

    • 0

      I agree no one on the OAP is below the true poverty line. The poverty line is just an arbitrary figure that is used for sympathy.

    • 0

      Take the pokies out of clubs/hotels and the pensioners are better off but the State Govts suffer. Never had that many pensioner complaints about lack of funds 40 years ago before these machines came in. Remember the free trips across state lines just to access them??

    • 0

      agree Cowboy Jim…go to any casino/club/hotels and have a look at the age demographic of the players..must have lots of money to waste.

    • 0

      I would like to see the government publish the data on quality of life every time they publish figures on longevity, it would help put things in perspective.

  7. 0

    A couple of divorses/property settlements (i had to pay out 2 exes to keep roof over kids heads) mean I’ll prob never have enough super to live on til I’m 65 but my body (& prob brain) will force me to retire from shiftwork anyway (& manual labour) at or before 60yo! And God help me if i end up wit more serious health problems after that as i can’t afford health insurance on a working wage now whilst working, so fat chance in retirement! Jus have to put a bullet in me or euthanase me as no hope of affordiing health cover or health costs now or in future! Electricity will have to be switched off & probably the gas will as well (maybe even have to quit the rego & insurances, as there simply wont be sufficient money for food otherwise, tho at least the mortgage might be paid out by then with some luck & more hard yakka!
    Great future to embrace..
    ot! Work arse off all our lives to fund others who avoid working but
    are still able to get govt payments & all the concessions that come with it & still afford smokes, alcohol, pokies, tattoos etc. (of which i have/do none of these as the $ don’t stretch that far which i don’t mind so much!)-
    Bit of an imbalance in this system i think!

    • 0

      Cheezy, old mate, look on the bright side. You’ve got a lovely view and you’ve managed to liberate yourself from a couple of brain-dead, yakking, dead-weight millstones.

    • 0

      Cheezil61, think of those SFR,s who worked their buts off for many years and are now receiving nothing from the Govt (and Opposition), and indeed are going to be worse off under a Labor Government.

      The Liberals will also hit us with their version of denying dividend imputations and we will lose again.

    • 0

      Liberals deny dividends? Wont that hurt their mates when shares go down?

  8. 0

    My greatest retirement concern for the country is that if nothing is done to stop governments fleecing self funded retirees instead of supporting them they will all die out. Lets face it super is not going to be enough for the majority of people to live on in old age.

    • 0

      This is of no concern to me personally but from all I have been reading lately the “cashless” society is almost upon us.

      Those who have mattresses stacked high with $100/50 notes ought to think what they are going to do with it.

    • 0

      the “cashless” society is almost upon us.

      Any idea how soon this will happen, so I can empty my mattress, LOL

    • 0

      Cashless society?? – Later this month the new $50 note is coming out, next year the $20 and then – wait for it the $100 in 2020. You guys are not reading the Reserve Bank bulletins obviously. Ray – just change your mattress’s contents for $US and you’ll be right. Even Aussie gold is still quoted in Yankee dollars.

  9. 0

    I am not concerned, I have gone from trying hard to be self sufficient and being totally self funded to just going with the flow having a good time and waiting for the time when I will have to go on the Old Age Pension ENTITLEMENT.
    It seems to be what this government wants so who am I to argue.



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