Early retirement versus working for longer
Early retirement is a goal for many Australians, but it may not always be the most wise decision. A 2015 report conducted by AMP found that the average age for retirement sits at 63 years for men and 60 years for women. Put in contrast with the corresponding life expectancies of 85 and 87 for men and women respectively, this leaves most retirees needing to sustain their lifestyle for another 20 years with little or no income.
Without a considerable wealth of assets tucked away, even a very modest lifestyle can be difficult to sustain over such a long period of time – and the age pension doesn’t help either. Anyone born after 1st January 1957 now has to wait until age 67 to have access to government support. Even once you hit that milestone, it still doesn’t fund what most would consider a ‘reasonable’ lifestyle. As of 1st July 2016, the maximum Age Pension rate for a couple is $31,148 p.a.
Not only does this reinforce the need to build a large pool of assets before your retirement, but it also highlights the importance of deciding exactly when and how you exit the workforce. Ensuring you have adequate funds available in superannuation, a built up reserve of personal savings and quick access to an emergency fund are all additional factors that need to be taken into consideration before you make the leap into retirement.
To check you have all your bases covered, you can use this 10-point checklist from AMP to find out more. For more information, advice regarding superannuation or any other financial concerns, be sure to give us a call today.