An unknown ‘philosopher’ offered the following: “Retirement is wonderful if you have two essentials – much to live on and much to live for.”
The June edition of the Retirement Affordability Index™, ‘Making sense of retirement savings’, explores that sentiment, for without savings a satisfying retirement is likely to be that much more difficult.
We work, we save, we spend, we live and love and grow a superannuation fund. But then we must work out how to use those funds most effectively – to limit the fear that we will run out of money. Longevity can be a two-edged sword.
Almost 6000 members responded to YourLifeChoices 2018 Retirement Matters survey. They told us very clearly that there is much uncertainty in handling the nest egg. The complacency and trust that may have existed before the financial services royal commission certainly does not exist now.
So what, if anything, is changing in the retirement income space? The Federal Government announced in May that it will review the entire retirement income system, including superannuation, pensions and taxation, as recommended by the Productivity Commission (PC) late last year. We await further details.
But what do you believe needs attention? The rate of the Age Pension, the ability to work without being penalised, the tax system, increasing super contributions – your list goes on.
YourLifeChoices member Mogo51 says: “One area that needs urgent attention, is the current attitude towards age pensioners earning income and the ridiculously small amounts [currently allowed]. As well, where one member of a couple has retired on the pension and the other is still working. There needs to be a fairer assessment … to ensure the combined income is at least above the minimum wage level.”
SuziJ: “First of all, increase all pensions – no matter which payment, be it Carer, Disability Support or the Age Pension. It’s been suggested that a minimum (rise) of $75 per week for a single person and $100 per week for a couple.”
AutumnOz: “The most sensible solution would be an honest overhaul of the taxation system and making sure that everyone, including multinational companies, pays their fair share of tax.”
Fairplay: “Governments of all persuasions should remember that those who have already retired have done so knowing the prevailing rules at the time and, therefore, any changes must only affect those not yet retired …”
BTM: “Just goes to show how few people really understand superannuation and the important role it plays in post-retirement life. Those who think that the base employer contribution will get them through are deluding themselves… Add to this the possible need for … aged care and you can see just how big a nest egg is required.”
So how to spend the nest egg wisely, taking into account your expected longevity, the Age Pension and government allowances, your financial literacy and your reticence or otherwise to use a financial adviser? That’s the point of this edition of the Retirement Affordability Index™ – to explain some strategies or at least pose the questions that might prompt you to ask questions.
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