I was listening to a short finance spot on the radio earlier this week and the presenter commented that 3 out of 5 people believed they wouldn’t have enough in super to support them in retirement, and that most felt their funds would only last 11 years once they did retire. Pretty scary.
Then I happened across an article today where REST Industry Super CEO, Damian Hill commented that “Despite the fact that many Baby Boomers are worried they won’t have enough money to fund their retirement and that they are not prepared, it is surprising that so few are starting the planning process early and seem to be in no rush to get any formal advice to help them on their journey.”
And I have to say that of the numerous “pre-retirees” we’ve met with over the past couple of years, most have cited having to “scrimp and save” in retirement as being their greatest financial fear.
So what’s the answer to what seems to be a big problem? It’s all in the planning…
Sometimes we use certain phrases so often that they lose their meaning and importance, and I think this is what’s happened with the term “retirement planning”. I’ve even heard some institution based Financial Planners refer to it as if it’s a product! But the simple fact is that it’s the most valuable thing you can do in preparation for your retirement.
For anyone that’s worrying that they won’t have enough in retirement I recommend doing some comprehensive projections of your long-term financial security (or having them prepared by your adviser). This entails looking at your current financial position coupled with your likely retirement needs, and then getting a snapshot of your likely position in retirement. This exercise has two really great potential advantages.
1. You may find that you will actually have more than you expected for your retirement needs, and have been worrying unnecessarily. We’ve found this to be the case for about half of the people we prepared projections for over the past year!
2. If you’re concerns are well founded and it seems you might be caught short in retirement, then you have time to develop an action plan and make changes that will improve your position. Don’t forget that if you’re 55 or over you may be able to take advantage of some really super (yep, it wouldn’t be my blog post without a bad pun) tax savings that could make a huge difference to your retirement balance. For many of our clients these tax savings will add tens of thousands to their balance.
For anyone looking to retire in the next ten years or so, my strong recommendation is to plan, plan, plan! It’s just too important to leave to chance, and unfortunately we don’t get a do-over.
If you’d like to know more about what is involved in our projections service, click here.
And if you’d like more detail, please tune into my weekly local radio program “You and Your Money” Radio Eastern, 98.1FM, straight after the 9am news on Thursday.