Retirement Income

Fri, 17 Mar, 2017Danielle McCarthy

Saving for retirement is only half the battle

Saving for retirement is only half the battle

Finance writer Rebecca Stevenson explains why saving for retirement is only half the battle.

How will you fund your lifestyle frills post retirement? How are you going to afford that yearly cruise once you retire?

As superannuation fund Equip notes in a recent blog post, “Australians are deferring retirement by a few more years, according to a recent report by Roy Morgan Research, with our average intended retirement age up to 61 from 58 in the company's 2014 survey.”

There is a wealth of advice available for those thinking about how they will fund the frills in their retirement.

To help you start here are a few things to think about when planning for your retirement.

Start early. Or just start.

Personal financial trainer Hannah McQueen says many of us are afraid of the "R" word.

McQueen had a client come in to see her this week. Her client was 60 and you would think well advanced when it came to saving and planning for retirement.

Not so, says McQueen, and this client's attitude to retirement is frighteningly normal.

"People think that by doing nothing they are avoiding making a decision, but doing nothing is a decision," she says.

While it's a good idea to start saving for your retirement early because the benefits of compounding interest started early is one of the easiest ways to grow your retirement savings, McQueen says the important thing is to start.

If you are nearing retirement hope is not lost.

Authorised financial advisor Martin Hawes says somebody in their 50s or 60s still has time.

"And these are often your best earning years."

Have a goal.

As Equip notes in another recent blog post, “There’s been a lot of discussion about how much you need for a comfortable retirement, with some organisations suggesting that $1 million should be the new national benchmark. The reality is most Australians will retire with far less, and still enjoy a very comfortable lifestyle.

“According to the ASFA standard (Association of Super Funds of Australia), the average couple needs $640,000 in savings for a comfortable retirement. For individuals that number is $545,000.”

Hawes says setting a goal is one of the most useful things to do before retirement.

But before you do that you need to work out how much your life of leisure will cost.

McQueen says people often don't know how much their lifestyle costs and if they take an educated guess its phenomenal how wrong they are.

"Pretty much everyone's lifestyle costs more than they think."

Now sit down with a piece of paper. Write down all the things you like to do on a regular basis and the costs.

Then think about the things that you want to be able to do regularly in a week when you are retired whether it's a coffee date at your local cafe or taking in a new movie.

Add in special trips or events you want to do, like a yearly cruise, and tally the cost.

Then factor in all the boring expenses you need to pay to live per week, including food, housing, transport.

Add it together and you should have some idea of how much you need to live a lifestyle you will enjoy.

The key thing is to have a plan.

"You need to plan what kind of lifestyle you want when you retire. Then you can work out how to get there. Almost anything is possible if you plan, and it is never too late," McQueen says.

And adjust it when required.

"You need to adjust your savings as you age," authorised financial adviser Jeff Matthews says, "it needs to grow to keep pace with inflation, but you also don't want to be the wealthiest person in the graveyard."

Matthews says you should think of retirement saving like a game of one day cricket. You want to plug away at your savings like a cricketer accumulates runs.

"Don't leave it till the end of the game to try and score all the runs."

Written by Rebecca Stevenson. First appeared on

Equip manages $7 billion of investments for members working across a wide range of Australian industry sectors. This superannuation fund has been providing strong investment performance and has been a reliable provider of retirement benefits for over 80 years.

Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.