The vast majority of Australians are worried they won't have enough money to fund their retirement, new research has revealed.
According to Mortgage Choice's inaugural Financial Confidence survey, 65.2% of surveyed respondents said they were worried about their retirement funds.
Of those surveyed, 60.7% said they would need more than $500,000 in order to retire 'comfortably' while a further 18.5% said they had 'no idea' how much they would need.
The majority of Australians want to live what they consider a 'comfortable' retirement, but to do that, they believe they need to have a huge amount of money in savings.
This type of mindset wasn't surprising, when you consider that many industry websites recommend Australians to have almost $600,000 in savings when they retire.
The Association of Superannuation Funds of Australia (ASFA) said singles should have approximately $545,000 in savings to live a 'comfortable' retirement.
While it is important to note that those savings can come from a variety of areas and assets - including the sale of an owner-occupied home - it is fair to say that Australians still need a lot of money in retirement and that level of money can be hard to save in just a few years. It is for this reason that Australians should start planning for their retirement as early as possible. You are never too young to start planning for your retirement, and the sooner you start planning, the better off you will be.
But while it is a good idea for Australians to start retirement planning as soon as possible, the data found more than 50% of Australians don't actually give their retirement 'serious thought' until they are in their fifties.
One in every four Australians said they didn't know how much money they had in their super, while three in four said they were not making additional contributions to their super.
The statistics would suggest Australians don't give serious thought to how they may fund their retirement until it is too late. Australians should be looking to boost their savings pool years before they actually retire. And, one of the best ways to do that is to make additional super contributions if and where possible.
Salary sacrificed super contributions are taxed at 15%, which is likely to be lower than your marginal tax rate. And, because any super contributions come out of your before-tax income, they are not counted as assessable income for taxation purposes. This is a simple way to save on tax and build your wealth, as more of your income is put towards growing your superannuation.
For those Australians who want to not lonly retire comfortably, but retire on their own terms, they need to start planning early.
For more information on retirement and your financial advice options, call us on (03) 8602-6777.