Planning for a comfortable life after retirement should be an activity you begin as early as possible. After spending decades in the workforce, you deserve to live out your golden years stress-free.

 Unfortunately, this is not always as easy as it sounds.

What You Need for a Comfortable Retirement in Australia

Life expectancies worldwide are at an all-time high—Australians who are 65 years old are expected to live an average of 20 more years. That’s two more decades of expenses for daily life, healthcare, and of course, leisure activities.

As of March 2021, the Association of Superannuation Funds of Australia (ASFA) estimates that the budget for single retirees living a comfortable lifestyle is $44,412 per year. By AFSA’s definition, a comfortable retirement means a good standard of living, private health insurance, good clothes, a car, your own home, and leisure-based travel. On the other hand, a modest lifestyle only involves only very basic activities, requiring $28,254 per year.

This means if you were receiving the maximum Age Pension, you would still not have enough funds to uphold a modest retirement, let alone a comfortable one. 

Further, not all retirees are eligible to receive the maximum amount—there are specific requirements to meet and asset tests to pass.

Putting all of this together, if you want to live out two decades of a comfortable retirement, you have to make up a difference of $20,000 per year, or $400,000 overall. 

This doesn’t account for significant healthcare costs and unexpected life events which should also be financially planned for. These numbers also assume that you have full ownership of your house – something that has become especially difficult in the country, given the rising real estate costs.

So, how do you save sufficient funds to enjoy the retirement lifestyle you deserve?

Planning for Retirement in Australia

The truth is that there is no such thing as a “correct” or “ideal” retirement budget for everyone. 

This is because there are numerous variables that will dictate your financial needs after retirement, and most of them are impossible to predict.

For example, the life expectancy of 85 years will not be the same for everyone. If you’re lucky enough to live to 90, or 95, what then? While you will be one of the healthy and lucky ones, your luck will soon run out if you run out of savings.

In addition, unfortunately many Australians retire with some kind of serious illness. Healthcare costs vary widely among retirees, and beyond your genetic diseases, you can’t precisely predict your health status or the associated costs of an illness. 

If you had children late in life, you might still be supporting them or your grandchildren throughout your working years which could significantly affect your savings. 

This means you may not be able to set aside your income to prepare for retirement. Additionally, there is the matter of inflation. Decades of inflation will erase a lot of your savings in just a few years of overhead expenses if you don’t invest them in well-performing assets.

This is why it’s crucial to begin retirement planning as early as possible. There are so many scenarios to consider and financially plan for.  

No matter what age you are or how many years you’ve been in the workforce, you should be conscious about how you’re going to live in the future. Consulting with financial experts will help get you on track to prepare for the final decades of your life.

Living a prosperous and happy life is more important than dying wealthy, but that doesn’t mean you shouldn’t be as financially prepared as possible before you retire. You deserve a stress-free life as a retiree, and the only way to ensure that is to plan your retirement as early as you can. 

Making smart financial decisions now will lead to a far more comfortable retirement so you can enjoy your golden years with peace of mind.

If you want to consult with expert retirement planning advisors in Port Stephens, Holmleigh Financial Planning is here for you. We provide tailored solutions for every client to plan for financial success. Book a complimentary meeting today so you can start planning for a happy and comfortable retirement.

Frank Kosteliz
June 18, 2021