How will you feel when you find out that you don't have enough money to retire?
Many Australian’s are looking forward to retirement, when you can settle downand enjoy leisure and family time. But how will you afford to keep up your lifestyle? Unfortunately for so many individuals and couples they are faced with the reality that they have not prepared for retirement early enough in life and are left with a ‘Retirement Gap’. This occurs because the funds in your super and/or savings demonstrate a shortfall for the amount of years you will spend not earning moremoney.
During this time of life there are also incidentals you may need to prepare for such as increased medical bills or funeral costs. Something none of us like to think about in the present because it feels like you have years and years to organise your retirement; however preparing now and implementing a solid plan for your retirement will ensure you have peace of mind and financial security.
In fact knowing can make all the difference! Realistically, the second you find out is the right time to start to make a few changes that will ‘close the gap’. Hopefully you are reading this before your 40th birthday…
How much do I need to retire?
All to often people only work out their retirement situation when they get close and start doing some maths. By then many Australian’s find it is too late to make a meaningful change to their retirement: whatever the numbers are, there’s not a lot of time to save enough to make an improvement. The reality is 84% of Australians retire with less than one third of what they really need.
Why does this happen? We are taught to get a job, pay our taxes and we know that there’s super; however superannuation doesn’t always add up to enough for retirement – So now is the time to do your numbers and start preparing for retirement!
What should I do right now?
You should calculate your approximate funds at retirement based on how your current contributions. Use the following Australian Bureau of Statistics facts tounderstand what this means for you.
Statistically Australian’s spend around 20 years in retirement and average spending equates to $40,000 per year as a single person and $60,000 per year as a couple. This requires either a lump sum to live off, or a strategy to provide this money when you need it. Do not include equity in your home at it’s projected value because you need somewhere to live. When you calculate your ‘Retirement requirement’ you cannot use the equity in your home because you need to live somewhere.
How can I fix my retirement gap?
Develop a clear and effective strategy to follow, understand the shortfall you may experience and start to implement this strategy; procrastinating is your number one enemy.
“Mortgage Choice spokeswoman Jessica Darnbrough said the older a borrower was, the more there would be a focus on the proof of income to service the mortgage, not just right now but over the life of the loan”
Wherever possible you need to save tax from your remaining income, maximise your income flow whilst working and employ a financial strategy to continue to grow your wealth. Property investment is a strong strategy that you may have used previously by purchasing a property (your home) that has already grown invalue.
This time you should look for the most efficient way to explore ALL economic avenues to get you the best possible results for your future.
Retirement should be a time of enjoyment and lesiure, however research has shown that the majority of Australians have on average $158,500 owing on their primary mortgage at retirement. Investing in property can help you to pay off your primary residence mortgage and retire knowing you are secure in owningyour home outright, allowing you to use your savings for leisure and lifestylerather than continuing to contribute to mortgage payments.
Property Investment Professionals of Australia chairman Ben Kingsley – “Naturally, we don’t like to have debt in retirement but if the cost of debt is being serviced by rental income it can be manageable,” Mr Kingsley said. Now is the time to investigate how an investment property can service you and your future.
For information on how to secure your retirement with an investment property contact our friendly team at info@havertonhomes.com.au or on 1300 293 318.
