Sort­ing your re­tire­ment

NT News - Real Estate - - Market Place - AN­THONY KEANE

Work­ing out how much money you’ll need to re­tire com­fort­ably can be one of life’s most con­fronting tasks.

How­ever, it doesn’t have to be dif­fi­cult, and there are tools and tech­niques to help Aus­tralians plan well for life af­ter work.

Peo­ple can feel de­jected hear­ing that $1 mil­lion-plus may be re­quired to re­tire com­fort­ably, but ad­vis­ers say it’s best to fo­cus on in­come needs rather than lump sums.

Bou­tique Ad­vis­ers strate­gic ad­viser Katie McDon­ald uses a “magic num­ber” ap­proach, where peo­ple ex­am­ine their cur­rent lifestyle costs and work out the amount needed to cover that.

For ex­am­ple, $50,000 of in­come would re­quire a $1 mil­lion lump sum sit­ting in a bal­anced mix of in­vest­ments earn­ing 5 per cent. This does not fac­tor in any age pen­sion ben­e­fits or draw­ing down on the bal­ance.

“The aim of in­vest­ing for the fu­ture is to put your­self in a po­si­tion where you don’t need to rely on the age pen­sion,” Ms McDon­ald said.

“You need to start some­where — most peo­ple are cur­rently spend­ing ev­ery­thing they earn.

“Work out how much you will need in re­tire­ment. Then work out the short­fall. Look for ar­eas in your cur­rent bud­get where you can trim back and put this into an in­vest­ment — most likely su­per.”

Most re­tirees re­ceive some pen­sion, and the As­so­ci­a­tion of Su­per­an­nu­a­tion Funds of Aus­tralia’s re­spected ASFA re­tire­ment stan­dard in­cludes pen­sion im­pacts. ASFA says a cou­ple cur­rently needs $56,548 of an­nual in­come to re­tire com­fort­ably while a sin­gle needs $40,798. As­sum­ing peo­ple will re­ceive a part pen­sion and grad­u­ally draw down all of their as­sets, cou­ples need a lump sum of $640,000 and sin­gles $545,000, it says.

Cer­ti­fied fi­nan­cial plan­ner Pa­trick Can­ion said very few peo­ple had an idea of the size of nest egg they would need when they re­tired.

“It’s much bet­ter to bring it right down and say how much money do you need ev­ery week or fort­night,” he said. Mr Can­ion sug­gested peo­ple use the gov­ern­ment’s mon­eysmart. gov.au su­per and re­tire­ment cal­cu­la­tors to pro­ject their fu­ture wealth. “You can be sim­ple, or fid­dle around with it, and have no wor­ries they’re go­ing to try and sell you any­thing,” he said. “But it’s one thing to know the num­ber — it’s an­other thing to do it.”

There are ways to en­sure your life be­yond work is more re­lax­ing than stress­ful

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