Bridging the retirement gap

April 27, 2015
Jason Sibio

A shortfall in retirement savings will catch many Australians out.

When we’re in the workforce we all have one thing in common: anticipation of enjoying a decent retirement. Sadly, many people share yet another common thread – having insufficient savings to fund the retirement that truly lives up their dreams.

$67,000 per person shortfall
One industry report (1) put a dollar value on this ‘retirement gap’, estimating that Australians collectively need an additional $727 billion in retirement savings to afford a high quality post-work lifestyle. That works out to a shortfall of about $67,000 per person.

So how has the gap come about?
One reason for the retirement gap is that the Australian super system, while regarded as one of the world’s best, is still maturing and many workers haven’t had the benefit of compulsory super for their entire working life.

Compounding the issue is longevity risk: half of Australia’s retirees will live well beyond their life expectancy age (2) - currently around 80 for men and 84 for women (3). In addition, better health means the active period of retirement, when we tend to enjoy things like travel, dining out, and sports and hobbies, is becoming longer.

A longer, more active old age is a something to celebrate – but enjoying it to the full calls for a healthy pool of retirement savings. As a guide, the most recent Retirement Standard produced by the Association of Superannuation Funds of Australia (ASFA) shows that, in general, a couple looking to achieve a comfortable retirement needs to spend $58,326 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $33,784 a year (4). How likely is it that you will have this sort of income to live off in retirement?

Two-thirds regret not saving earlier
In a long and rich life, it’s likely that many of us have the occasional regret. But a recent study found 67% of Australian retirees regret not saving more to achieve their retirement aspirations (5). What’s especially worrying about this figure is that saving for retirement is something all of us can do.

The good thing about retirement planning is that it’s never too late - or too early - to get started, however it’s area where quality financial advice can be extremely valuable.

Now’s the time to review your plans
If you don’t currently have plans in place to grow your retirement savings, now is the time to speak with me about developing a strategy to build a quality nest egg for the future.

Alternatively, set a date to meet with me to review your current retirement strategy. As our lives change it is important to ensure you are still on track to live comfortably in retirement.

Remember, one of the benefits of your Ongoing Service Package is that I am here to help you get on track – and remain on track – to achieve your goals.

Jason Sibio - BBus ADFP - Financial Adviser
Mortgage Choice Fianancial Planning
Authorised Rep No 449850
Ph: 03 9432 6070, Mob 0423 941 895
mortgagechoice.com.au/fp/jason.sibio


1. Rice Warner media release: Australia's retirement income 'bulge' requires urgent, comprehensive fix, 27 August 2014, http://ricewarner.com/newsroom/2014/august/27/australias-retirement-income-bluge-requires-urgent,-comprehensive-fix/
2. Rice Warner media release: Australia's retirement income 'bulge' requires urgent, comprehensive fix, 27 August 2014, http://ricewarner.com/newsroom/2014/august/27/australias-retirement-income-bluge-requires-urgent,-comprehensive-fix/
3. Australian Institute of Health and Welfare, http://www.aihw.gov.au/deaths/life-expectancy/
4. ASFA Retirement Standard Sept 2014 quarter, http://www.superannuation.asn.au/resources/retirement-standard/
5. HSBC Global Report 2013: The Future of Retirement Global Report, Life after work?

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