RSM Australia

Increased life expectancy

Wealth Management Insights

Australians are staying active and living longer than previous generations, almost 25 years longer. That should be great news. 25 more years to spend with our children and enjoy our grandchildren, to finally travel to Italy and test our high school Italian or to start working on that project we’ve never quite found the time to get around to. All this is now possible thanks to the amazing medical advances we now take for granted as standard procedure as well as improved living and working conditions, sanitation and improved health awareness. However this has created a new anxiety among retiring Australians, instead of looking forward to a rewarding retirement, many now worry that they might outlive their savings and spend those last years dealing with financial hardship.

Previous generations could rest easy as the age pension provided certainty that Australians' could retire at 65 and continue to maintain a dignified lifestyle. Unfortunately, the combination of politics and the economic realities of funding Australia’s large population now in retirement has meant that pension support has been greatly reduced while the age of entitlement has increased. Many Australians now feel they can no longer rely on the Age Pension for certainty in retirement and must look to fund this period of their lives themselves.

When faced with this problem, a previously heard suggestion was 'she’ll be right' however, increasingly people are getting on the front foot and tackling the problem head on. Those taking a pro-active approach to ensure their retirement savings stack up against the realities are asking the following questions

How much will I need to have the retirement I want?

Despite experts declaring that we must have a certain magical level of savings before you can afford to retire, the truth is that we each live different lifestyles and have different expectations for retirement. What each of us will want or need in retirement will be entirely different and based on our unique situation. Will you have debt to service? Do you intend to travel? Will you be helping children or grandchildren? Are you planning to downsize? Are you planning a sea or tree-change?

How long will my retirement savings last?

Aware of what they are spending, people want to know how long their savings can continue to provide an income. Do they need to cut back on spending? Can they afford to relax and enjoy themselves a bit more? Do they need to do something different with their money?

How should I invest my retirement savings?

The simple answer is as safely as possible. The reality is that anticipating another 20 years of active life, most of us won’t be fortunate enough at age 65 to have a bank balance capable of funding our entire retirement. So what can we do to grow our money? Should I use superannuation? Should I invest in shares, term deposits or property?

What can I do to give myself the best chance of maximising what I have?

As Winston Churchill espoused, “Failing to plan is planning to fail”, and the best thing you can do is start planning as early as possible. If you’re not sure where to start, you’re not sure of your options or you just don’t have the time to do it yourself, talk to your financial planner, get their assistance to ensure that you have the best chance possible of achieving the things that are most important to you and enjoying a happy stress free retirement.

This presentation article has been prepared by RSM Financial Services Australia Pty Ltd ABN 22 009 176 354, AFS Licence 238282. This article does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision.