Are your finances retirement ready?
Christopher Zinn offers tips for ensuring you and your funds are ready to take on the future.
While retirement is often referred to as the best years of your life, it can quickly become a stressful time if you aren’t prepared for it.
Only 56% of Aussies aged 50 or over have a financial plan for retirement, which means a staggering 44% are not financially ready for leaving the workforce according to the latest data released in the 2018 National Seniors Social Survey (NSSS) — indicating many of us need to start planning for the future as soon as possible.
TODAY chatted to consumer campaigner Christopher Zinn for his tips on how to future proof your finances.
TODAY: Chris – we’re living longer but we don’t have the funds to cover it…
ZINN: According to the survey one third of the respondents aged over 80 said they had already run out of savings and a quarter of those aged between 75-79 said likewise. So running out, although you’ll still be covered by the aged pension, is a major concern. The Australian Superannuation Funds Association (ASFA) estimates a couple needs a lump sum of at least $640,000 to ensure what they define as a comfortable retirement. Another approach for above average income earners is to assume you’ll need two-thirds of your income before you retire to maintain the same standard of living. The amount of superannuation you might need for retirement depends on your desired standard of living, if you own your home and who you ask — it can range from $640,000 for a couple according to ASFA to well over a million dollars.
TODAY: How important are investments for financial plans?
ZINN: It’s most important to get the right sort of advice from trustworthy experienced and reliable experts to get the right mix, diversity and risk profile for you. Despite all the bad news and royal commissions etc there are of course fine financial planners out there — you just need to find one. There’s advice online from trusted sources about how to achieve this. The survey mentioned shows that despite their fear of loss, the majority of older Australians hold a large proportion of market-linked investments which are vulnerable to events such as the GFC.
TODAY: How can our elderly prepare for the costs of aged care?
ZINN: Covering health and aged care costs was also very important or somewhat important to more than 90% of respondents. The costs of aged care are high although the government can pay a significant amount depending on your income and assets. Residential aged care can cost more than $111,000 a year. It’s a complex issue and takes planning — some financial planners just specialise in this area.
TODAY: For those looking to work longer and retire later, what’s your advice?
ZINN: Invest in your health and wellbeing and stay active — retirement as a destination is really changing as the baby boomers age. Seek proper financial advice about investments, super, property which suits your needs and means, and be very wary of non-professionals and opportunities which seems too good to be true. Remember the higher the return on any investment the higher the risk so you could lose some or all. But take heart, most people according to the survey seem to like being retired.