Will you be living on 30% of the income in retirement?

Kerry Schultz

I have recently listened to an interesting speech by Meg Heffron who is an Actuary and known within the Industry as a specialist. She was speaking about the level of retirement savings of different age groups and what kind of retirement income these will allow for.

One of the age groups she spoke about was the under 45 year olds, and her comments were something I wanted to share, especially to many of my clients and peers who are also in this age bracket with me. We generally don’t think seriously about their Superannuation and retirement for numerous reasons including the fact that retirement is 20-30 years away, compulsory Superannuation is accumulating, there are house mortgages to be paid, a lifestyle to live and enjoy while they are young.

Meg being an Actuary has done some research and has found that if the only money contributed to Superannuation is the compulsory employer amounts then by the time this age group retires they will only have enough superannuation to allow for an annual income of 30% of the income they received the year before they retired!

Living on 30% of my income in retirement isn’t the retirement lifestyle I was dreaming of. It makes you think if you will be able to go travelling, coffee and cake dates with your girlfriends, fishing trips with your mates, own a new caravan, etc. Yes the house will be paid off (hopefully) which is lucky because you may be there more than you had hoped.

So I’ve been thinking about myself, clients and peers who are in the age bracket and wondered how many of them had thought about superannuation, what they wanted to be able to afford to do in retirement, and how to be able to afford to put a bit extra in to Superannuation with all the rest of the living expenses we currently have.

Everyone knows the saying ‘you don’t miss what you haven’t got’ so thinking about this the easiest way may well be that when you get your next pay rise or business makes an increased profit consider if you could put some of that extra income away for retirement to enable you to live the retirement lifestyle you want after your many years of hard work.