How to increase your chances of achieving a comfortable retirement
Most Australians over 50 don't expect to achieve a comfortable retirement, but that doesn't mean they won't.
It all depends on what actions they take.
The latest CFS Rethinking Retirement Report found those closest to retirement are actually the least likely to course correct if they are off track.
Which Aussies are more likely to take steps to improve their retirement?
In fact, it is younger Australians under 50 who are more likely to take the following steps than those over 50:
1. Increase their super contributions
2. Seek professional financial advice
3. Adjust their investment strategy
4. Reduce their expenses and save more
5. Speak to their super fund
Meanwhile, over 50s are more likely than their younger counterparts to not know what actions to take and are also more likely to delay their retirement date if they are off track.
If you can't see yourself achieving a comfortable retirement, there are several things you can do.
The first is to use a retirement calculator to learn how much money you are likely to retire with. The next step is to decide what type of lifestyle you want in retirement.
If your projected super balance at retirement is falling short of what you think you'll need, it might be worth topping up your super.
This can be an effective way to get you closer to your goals. Making voluntary contributions to your super, or setting up salary sacrifice, are two ways to build up your retirement savings.
On average, Australians over 50 believe they need an annual income of $100,000 to enjoy a comfortable retirement. This is double the ASFA standard for a single ($51,814) and significantly greater than that for a couple ($72,031).
Given this, there is little wonder why most Aussies over 50 can't see themselves achieving a comfortable retirement.
How much do you need for a comfortable retirement?
But what is a comfortable retirement anyway, and how much does it cost?
When asked, respondents gave largely similar answers.
Most simply want to maintain their current lifestyle. They want regular outings to restaurants rather than fine dining experiences and prefer domestic over international travel or cruises.
This lifestyle may not seem extravagant, but it is more expensive than it used to be.
Those approaching retirement are clearly torn between cost-of-living pressures and a lack of awareness around how much money is required to enjoy a comfortable retirement.
What role does financial advice play?
This is where financial advice can be valuable. Encouragingly, we found the number of people seeking advice from their super fund has increased from 23% to 28% over the last year.
Advice gives pre-retirees the chance to ask questions, discuss the lifestyle they hope to achieve, and come out of that experience with a retirement plan to give them confidence as they transition into the pension phase.
And confidence is key. Our report shows that 85% of non-retirees who receive advice say they are on track to reach their retirement goals. Less than half of those who have never received advice can say the same.
Thankfully, more affordable advice models are now accessible, and professional advisers are finding innovative ways to make their services available to more Australians.
If a comfortable retirement is what you desire, take action to make it a reality. You'll be surprised what you can achieve with a little help.
If you don't know where to start, simply give your super fund a call and they can talk you through the options available to you.
Most Australians receiving financial advice today are confident they will achieve a comfortable retirement. Are you?
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