Retirement planning.... Beware of the gap!

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May 31, 2022
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Article published by RJS Wealth Management Pty LtdAs famous British Prime Minister Benjamin Disraeli once said, “I am prepared for the worst but hope for the best,” which echoes in many a motivational speech. However, should you apply the same thinking to your retirement? A couple of empty nesters, who we’ll call George & Martha, eliminated hope by trading it for knowledge, security and planning. Knowing your superannuation and other income sources will take care of you in retirement is great peace of mind compared to “hoping” everything will be okay.Beware of the gapData from the ASFA Retirement Standard reports a healthy couple needs approximately $1,118 each week to maintain a household (assuming they own their home outright.) This takes into account all the utilities and insurance, plus allowances for renovations or overseas trips. Doesn’t seem like enough? Perhaps it’s not. Maybe you prefer more travel or more meals at a-la carte restaurants than the “average couple”.According to the MLC Quarterly Australian Wealth Sentiment Survey, males aged 30 now need about $1.58 million to retire comfortably, compared with $1.76m for a female of the same age. The stark fact according to the survey, is that the average saved by the time George is 60-64 is only $198,235 and Martha only $112,632. Now that is a significant gap whether you are an average couple or not!If George and Martha didn’t take action, they would be bound to end up with a super balance around the averages provided. Resulting in the real possibility of sustaining their lifestyle for only a few years. Sure, they could apply for the old age pension, but that may be only half of what they need for a worry-free retirement. And I guess the question remains… how long can the government afford to continue to pay the age pension?Retirement planning: How to live on facts, not hopeGeorge & Martha approached us early on in their careers (around age 30) and committed themselves to a retirement plan that bolstered their superannuation and achieved their goals for retirement. Now in their early 60’s, George & Martha are planning to downsize from their Melbourne family “compound” and move to the Central Coast of NSW. They also want to take a round the world cruise, and have some spending money for “spontaneous” adventures.So how did we put the plan in action?A Budget:Where is your cash going each day? Tracking your spending helps you understand and control your daily money habits.Taking control of their super:We helped them set up a self-managed super fund (SMSF) for greater investment choices, increased control over their investments and improved asset protection. With a SMSF, they diversified their portfolio and took full advantage of everything a SMSF has to offer. All with some expert advice from RJS Wealth Management.Salary Sacrifice into Super:George and Martha both sacrificed a small portion of their income to make extra super contributions each pay period. Their Executive Planner made sure that these pre-tax contributions in conjunction with the 9.5{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} most employers pay into super fell within the contributions limits to take full advantage of the concessional tax environment. This tax-effective solution added up in the long term.Transition to Retirement from age 56:George also tapered off his hours, working more as a consultant a couple of days a week as he transitioned out of the workforce. A transition to retirement strategy enabled George and Martha to maintain their income, continue to save for retirement and transition into the retirement lifestyle.There’s no way around it. When it comes to superannuation, it pays to start early to finish on target. After all, the sooner you start, the more you’ll have. To find out how to close the retirement gap and to start your retirement planning, talk to a an RJS Strategic Wealth Planner and retire with peace of mind – not hope!This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

June 1, 2022

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