If you had financial forewarning, would it have made any difference to your retirement status?
What would you like to have told yourself when, all those years ago, you were starting on the path to saving for retirement?
If you had that forewarning, would it have made any difference?
Maybe. Maybe not.
It seems millennials are making the same mistakes as boomers when it comes to planning for a comfortable retirement.
To avert the impending ‘retirement crisis’, young Australians need to learn early how to invest and save for retirement, otherwise they risk walking the same path as six in 10 boomers who will enter retirement this year expecting to run out of money before they die.
That’s the supposition made by Equity Mates co-founders Bryce Leske and Alec Renehan on the Equity Mates Investing Podcast.
Many baby boomers now face gloomy financial prospects at retirement, say the pair, who estimate that around 440,000 older Aussies who will retire this year are not prepared to support themselves to the end of retirement.
“The average Australian would outlive their retirement savings by five years,” say Mr Leske and Mr Renehan.
A recent study backs up this notion.
It found that most older Australians (53 per cent) are worried about outliving their savings, with more women (59 per cent) being concerned than men (47 per cent).
Unsurprisingly, people without super reported the highest levels of worry, with 23 per cent worrying frequently. Concern was highest for 68 per cent higher in those yet retired and those with less than $500,000 in savings were 65 per cent more worried.
YourLifeChoices own research found that six in 10 retirees are either unsure or know that they will not have enough money to live a dignified retirement.
“They fear running out of their own money, even though the safety net of the Age Pension will be there for them,” said Challenger chairman of retirement income, Jeremy Cooper.
“This sends a strong signal that people worry about being sorely reliant on the Age Pension. It’s therefore important that super funds explore ways of providing more lifetime income to their members.”
Around three million baby boomers are expected to retire over the next decade and, if unprepared to support themselves, will increase the strain the public health system, public housing and any budget surplus.
It is critical then for young people to learn how to invest in the stock market rather than saving it in cash, ‘given that between 1900 and 2010 the Australian stock market saw 11.8 per cent growth per year while, at the same time, Australian bonds returned six per cent and savings in cash stood at 4.8 per cent’, reports Super Review.
Nothing created “more wealth for more people than the share market”, says Mr Leske.
Considering the huge disparity in returns on cash and shares, 40 per cent of working millennials are not invested in the stock market, which Equity Mates thinks is a big mistake.
“There are so many barriers to getting started investing. From all the industry jargon to a sensationalised financial media, it was daunting to get started. So, for years, I didn’t,” Mr Renehan said.
“Once you break through these barriers and get started, you understand just how important investing is for your financial future.
"… we hope to introduce more young Australians to the great wealth creating machine the world has ever known. In doing so, hopefully this generation will be better prepared for retirement than their parents and grandparents generations.”
Do you wish you’d invested more money in the stock market when you were younger? What financial advice would you have given yourself when you were younger?
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