Aussie’s are proving to be NOT the best savers and are living on what we term as “hope-ium”. So when it comes to retirement, how much is enough? Recent history is generally showing us that unless you have a greater awareness and establishment of a retirement plan you could well NOT be retiring the way you dreamed.
We would say, approximately eight in 10 Australians at this moment, and that we see in our practice haven’t thought about or acted upon formal financial advice when it comes to retirement until we mention it – leaving the importance of retirement to ‘a chance of “hope-ium’. And from what we have seen so far, that wouldn’t be enough to guarantee a comfortable retirement.
So in retirement, how much is enough?
Let’s put it this way, do elite athletes train sporadically to qualify for the Olympics? Would you run a business with no business plan, budget or tracking your revenue and expenses? The answer would be no. And what about your day job, do you just up and do what you feel like with no direction or KPIs? The answer is likely to be no, (of course depending on your job) but you still have responsibilities.
However, we see for a majority of Australians’ financial management doesn’t extend beyond having employment, awareness they possess superannuation and perhaps loan for a house and ownership of some shares or an investment property.
We don’t want people just living in hope that this will be enough to see them through their retirement.
How much is enough?
Can you answer these retirement questions? If not, you are literally living in hope that it will all work out when you are ready to retire.
So let’s look at 5 simple questions about retirement.
If you can’t answer these five questions, there is a strong chance you’re living on hope-ium and really in the dark about your retirement needs.
1. What is your planned retirement date?
I’m not talking about a half-hearted guesstimate of oh, say, 65ish, for example, I mean, have you set a specific date to retire by?
We see these deadlines have strong powers, and links in with the other four questions.
2. How much income will you need to retire?
You should ask yourself what it would cost to live your desired lifestyle in retirement, mortgage and kid free.
“In addition, if you are not working what would you do with your time? Travel more, pursue a hobby, or volunteer with a charity are common ideas? “Have you then worked out how much it would cost to fund those interests?”
Say the figure could be $65,000 a year for living expenses and another $20,000 for an international holiday every two years.
3. What assets will you need?
If you don’t have an answer for how much income you desire in retirement, this question cannot be answered. Once you do have an income goal, we can work out the value of all the assets you need outside of your home to support that lifestyle in retirement.
A retirement income of say $75,000 will mean $1.5 million outside the family home, or $3.4 million in 14 years’ time when adjusted for inflation.
4. What are you currently spending?
Understanding where you spend your money is your key to your success. That is why we have chosen a app and program of choice that will help you categorize and track spending. As well as show you how to connect and see ALL your money and accounts ALL in ONE place, with ALL transactions across ALL financial institutions – including your super, home loan/s, credit card/s, shares/ investments etc.
“Knowing where you spend your money will help you be wise with where you allocate your hard-earned cash. Fun and enjoyment now need to be balanced with planning for the future before it becomes too hard in the form of being too late to really effect a difference.
5. What do you save every month?
This isn’t just the amount of money that isn’t spent, but money specifically put aside for the future.
Once you know what you are seeking to achieve, a financial plan can then be put in place to help you work towards achieving what you want.
If not, you will continue living in hope of winning the lottery or gaining a grand inheritance (if you haven’t already spent that!) without knowing the goals you are working towards.
If you are unsure of what you have or more importantly NOT HAVE, please contact us — make a time to review where you are and where you would like to be.
What will your number be?
Q: Can you share it?
A: Yes, but... only with the friends and colleagues who care.
My mentor taught me, “Have conversations that matter with people who care.”
THIS is a conversation that matters.
Now you pick the people you think care.
Send those special people here: https://fmgws.com.au/