92 per cent of people approaching retirement are very short of savings.
A study by Investment Trends has highlighted the extent of the financial under-provision of people approaching retirement, as well as the harsh impact on their retirement planning caused by the GFC. The study is based on a survey of 2861 people aged 40 or more.
Key findings include;
1. Fewer than 1 in 10 of the people surveyed (only 8 per cent) had enough super to achieve the generally accepted benchmark of $40,000 per annum of retirement income. For those already retired, the average income from their savings was only $19,000.
2. The average time by which retirement would be pushed out due to the impact of the GFC was 2.9 years, increasing to 3.7 years for those who are within 5 to 10 years of retirement.
3. For those who had 5 to 10 years to go until retirement, the average in their super balances was $71,000, and for those 1 to 3 years from retirement, it was $140,000.
A $40,000 annual income is regarded as the minimum needed for a comfortable retirement, and is calculated at 65 per cent of average pre-retirement income.* Based on these figures, the average savings would only last for 3 or 4 years, meaning that once they were depleted, all that would remain would be the age pension, which, depending on your income and assets situation is currently around $14,615 annum for singles and $24,414 per annum for couples.
What is clear from the study is that the overwhelming majority of the people nearing retirement are going to outlive their savings, and they do not have a strategy in place to change this fact.
To appreciate what this means, sit down and work out a monthly budget to come out on say, $2,000 per month. Then realise that this would be your lifestyle for the next 30 or 40 years, or even longer, given the increase in life expectancy. This reality is hitting pensioners today, and it will continue to hit all those who fail to make provision for their retirement years in the years when they are still earning a salary.
If this sounds like you, and you don’t have a strategy, and don’t like what is waiting for you down the track, or if you would like to learn more and discuss how McCarthy Group can assist you, click here.
CEO McCarthy Group
Reference: “Retirees feeling the pinch”, Sydney Morning Herald, Weekend edition, 4-5 December, by Annette Sampson
*AMP/NATSEM Income and Wealth Report