How much is enough to live on when you retire?
It’s a question that will affect everyone at some point in their lives, but very few people know how to answer.
The most recent estimation comes from the Association of Superannuation Funds in Australia.
According to their researchers every Australian will need at least $55, 000 per person, for every year of retirement to ensure they will be enjoying the last years of their lives in comfort.
Comfort is the operative word here and in any discussion of retirement, because it implies being able to extend yourself further than just covering the basics. It means being able to afford stuff like holidays, eating out and buying a few odds and ends for around the house. And it also assumes that you don’t have a mortgage over your head.
Sounds pretty good doesn’t it? The kind of lifestyle you’d wish for the people you love, who’ve worked most of their lives.
But these are some pretty extraordinary circumstances we’re talking about here.
Firstly, not everyone will have a mortgage. We’re already looking at an entire generation of people forced out of the property market thanks to inflated prices.
Secondly, the proposed retirement plan also assumes that you’ll be able to set aside a huge amount of money during your working life to cater for those comfortable retirement years. But that’s also a completely unrealistic goal for most people.
A one-off payment of $55, 000 might not seem like a fortune on its own, but multiply that amount by anything up to 25 years and we’re talking about an enormous amount of spare cash.
In a perfect world everyone would have a retirement plan that would ensure they’re independent and comfortable in the later years of their life. That’s a no brainer.
But in the real world, people need sensible retirement goals that are realistic and flexible enough to accommodate the average standard of living. And that means appealing to the huge numbers of Australians who will never own their home or be able to save anywhere near the targeted amount year after year.
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