How long in retirement?

Did you know you have a 50 per cent chance of outliving your retirement savings?

How long in retirement?

Although there are many uncertainties in life, an undeniable fact is Australia’s population is ageing.

Over the next 30 years, the number of people aged over 65 will double from 3.5 million (15 per cent of the population) to 7 million people (22 per cent of the population) and will outnumber those aged under 18. The number of Australians aged over 85 will also rise dramatically, tripling from under 0.5 million to 1.4 million people.2

This ageing trend will significantly increase demand for the Age Pension, aged care and acute health services, putting additional pressure on Government spending. 

How long will I live?

Although it’s great news Australians are one of the longest lived populations on the planet, and our longevity is steadily improving, it means potential retirees need to prepare for a long retirement.

Given current improvements in mortality, Australians already in the workforce need to be prepared to support themselves during an increasingly number of years in retirement. According to the latest estimates by the Australian Government Actuary, the average life expectancy for men aged 65 is now 87 years and for women aged 65 it is 90 years.3

For younger Australians, retirement could be even longer. Continuing improvement in mortality trends means they could realistically be living in retirement up to 30 per cent longer for women and 44 per cent longer for men than current retirees.4

That could mean spending up to three decades – or a quarter of your life – in retirement.

So, if you are planning for a retirement that is a little more comfortable than that provided by the Age Pension, you will need to ensure your retirement savings are sufficient to last a very long time.

How can I save more?

Saving a little more while you are working can be one way to help ensure your money doesn’t run out in the final years of retirement, leaving you totally reliant on the Age Pension.

There are also some clever strategies that can be used to help build your retirement nest egg. Consider talking to a financial adviser about some of the ways you can boost your retirement savings, including:

  • Voluntary after-tax contributions – Adding as little as $50 extra a month could add tens of thousands to your final retirement savings balance. For many people, this can be more tax effective than saving the same amount outside super.
  • Salary sacrifice – By agreeing to forego part of your future pay, your employer places benefits of a similar value into your super on top of the normal SG contribution.
  • Spouse contributions and contribution splitting – These strategies can build your super balance, equalise the super for each partner and potentially reduce your tax bill.
  • Government co-contributions – If you are a low or middle-income earner and make an after-tax super contribution, the Government may make a contribution into your super (up to $500 in 2013-14).5
  • Transition to retirement (TTR) pensions – Employees aged 55 to 75 can set up a TTR income stream will they are still working as a way to ease the transition into retirement. They can also boost their super balance and may even save some tax.

 

Useful links:

Help Save Retirement

Find an MLC adviser near you

Seek the financial advice that's right for you

Important information and disclaimer

1 December 2012 Retirement Income Report – Investment Trends

2 Institute of Actuaries, Submission to Financial System Inquiry 2014, www.actuaries.asn.au

3 Australian Life Tables 2005-07 cited in Institute of Actuaries, Submission to Financial System Inquiry 2014, www.actuaries.asn.au 

4 Institute of Actuaries, Submission to Financial System Inquiry 2014, www.actuaries.asn.au

5 Australian Tax Office, www.ato.gov.au

This information has been provided by MLC Investments Limited (ABN 30 002 641 661) and MLC Limited (ABN 90 000 000 402) members of the National Australia Bank group of companies, 105153 Miller Street, North Sydney 2060. This communication contains general information and may constitute general advice. Any advice in this communication has been prepared without taking account of individual objectives, financial situation or needs. It should not be relied upon as a substitute for financial or other specialist advice.

Any advice in this communication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this communication we recommend that you consider whether it is appropriate for your personal circumstances.  Any tax estimates are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

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    COMMENTS

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    Tom Tank
    26th Apr 2015
    1:15pm
    A great pity to see commercial interests taking over this site.
    buby
    5th May 2015
    4:39pm
    Australians living longer.....lolololol OH what a fallacy. When our foods are so Genetically Modified, and making us sicker by the day! and our Health system failing those that need it.
    That one big JOKe i think. ON us!!!


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