In­ter­est­ing facts on re­tire­ment sav­ings

Townsville Bulletin - - Investor -

There­fore, if you be­lieved you could spend $ 50,000 a year when you re­tire you should be aim­ing for to­tal fi­nan­cial as­sets of $ 600,000.

The sum you need to in­vest along the way de­pends on how soon you start and the rate of re­turn you achieve.

For ex­am­ple, if a 21-yearold wanted to re­tire at 65 with an in­come of $ 3500 a week in to­day’s dol­lars, they would have to in­vest only $ 235 a month if the con­tri­bu­tions were in­creased in line with in­fla­tion.

It’s a dif­fer­ent mat­ter for a per­son aged 40 as they don’t have time for com­pound in­ter­est to work its magic.

They would have to in­vest an in­dexed amount of $ 880 a month. That’s the ef­fect of time.

The cal­cu­la­tions above as­sume an in­fla­tion rate of three per cent and a net earn­ing rate of nine per cent.

If the in­vestor man­aged to achieve only in­fla­tion plus four per cent, the fig­ures change dra­mat­i­cally.

The 21-year-old would have to in­vest an in­dexed $ 523 a month while the 40-year-old would have to in­vest $ 1471 a month. For­tu­nately, we still have a gen­er­ous aged pen­sion sys­tem.

If a cou­ple had only $ 300,000 in fi­nan­cial as­sets in re­tire­ment they would be el­i­gi­ble for a com­bined aged pen­sion of $ 26,416 a year.

This should be enough to make up the gap.

Noel Whit­taker is a di­rec­tor of Whit­taker Mac­naught Pty Ltd. His ad­vice is gen­eral in na­ture and read­ers should seek their own pro­fes­sional ad­vice be­fore mak­ing any fi­nan­cial de­ci­sions. His email is n o e l . w h i t t a k e r @ w h i t t a k e r m a c n a u g h t . com. au.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.