Re­tire­ment not just for mil­lion­aires

Mercury (Hobart) - Property - - Finance And Conveyancing -

An­thony Keane ONE­mil­lion dol­lars can be a scary num­ber for­manypeo­ple, es­pe­cially if you hear that’s how­muchy­oumay need for a com­fort­able re­tire­ment.

ManyAus­tralians worry their nest egg is too small but most will be able to en­joy their golden years on much­less than they think, thanks to our gen­er­ous tax and pen­sion sys­tems, fi­nan­cial strate­gist Theo Mari­nis says.

He says the com­monly touted $1 mil­lion fig­ure re­lates to­how­much money is needed to gen­er­ate about $50,000 of an­nual in­come, but this con­clu­sion is too sim­plis­tic.

‘‘For a tra­di­tional Aus­tralian cou­ple on av­er­age an­nual in­come of $65,000 and $200,000 in su­per­an­nu­a­tion, the ac­tual take­home in­come from the com­bi­na­tion of age pen­sion and su­per will be very sim­i­lar to what they were earn­ing when work­ing full time,’’ Mari­nis says.

‘‘Even if your re­tire­ment sav­ings are min­i­mal or even non-ex­is­tent, you can still live bet­ter than most re­tirees around the world.

‘‘Don’t think that you need $1 mil­lion to re­tire. If you want $28,000 a year you don’t need any­thing be­cause that’s what the pen­sion is (for a cou­ple).’’

All of that age pen­sion in­come Aus­tralians Tax Off­set.

Any­with­drawals from su­per for re­tirees aged over 60 are also taxfree.

Golds­bor­ough Fi­nan­cial Ser­vices di­rec­tor and ad­viser Glenn Tod­man says pay­ing tax is non-ex­is­tent for the vast ma­jor­ity of re­tirees to­day.

‘‘Each mem­ber of a cou­ple can earn $26,000 be­fore they pay any tax,’’ he says.

The start­ing point for any­one look­ing to re­tire­ment is to crunch some num­bers.

‘‘Work out what you need to live on. Some peo­ple need $35,000 to $40,000 and some peo­ple need $60,000 or more,’’ Tod­man says.

He says peo­ple typ­i­cally spend more money dur­ing the early years of re­tire­ment and much­less later.

‘‘It’s no use get­ting to 80 or 90, hav­ing a big bucket of money, and think­ing ‘I wish I’d gone on that trip’,’’ he says.

Mari­nis says the Gov­ern­ment could make re­tire­ment a lot eas­ier by re­lax­ing the caps on su­per.

‘‘The cur­rent con­ces­sional con­tri­bu­tion cap of $50,000 per an­num­for peo­ple over the age of 50 falls to $25,000 per­an­nu­mafter June 30, 2012. This is ridicu­lously low,’’ he says. ‘‘It de­prives Aus­tralians of a vi­tal op­por­tu­nity to boost their su­per­an­nu­a­tion sav­ings in their peak earn­ing years.’’

LOOK­ING AHEAD: It can be daunt­ing to work out how much is needed for a com­fort­able re­tire­ment.

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