Do You Have Enough to Sustain You in Retirement?
A new report by the World Economic Forum has made the grim warning that Australians will outlive their superannuation account balances by a minimum of 10 years. The report says women will outlive their superannuation savings by 12.6 years and men will outlive theirs by 9.9 years.
If you think we’ve got it bad, spare a thought for the women and men of Japan they’re expected to outlive their retirement funds by 20 and 15 years respectively with less the amount of savings than us Aussies.
The report described Australia’s retirement saving scheme as “one of the most well-developed from an accumulation perspective, with high levels of coverage, mandated levels of savings and strong investment architecture”.
The same report also says long-term approaches are needed for the retirement phase as people are now living longer after retiring.
Our aging population is placing unsustainable pressure on government and employer-sponsored pension systems
“Our aging population has and will continue to place unsustainable pressure on government and employer-sponsored pension systems, leading to a growing trend for individuals to take responsibility for financing their own retirement. But savings have failed to keep pace with the decline in traditional pension plans, leading to the current retirement savings deficit,” the report said.
The retirement savings gap was already at $70 trillion in 2015 and that could grow to as high as $400 trillion by 2050 if steps aren’t taken to address the issue.
Han Yik, Head of the Institutional Investors Industry at the World Economic Forum, said people need to invest in their retirement savings earlier in life and that “The real risk people need to manage when investing in their future is the risk of outliving their retirement savings,” Mr Yik said.
“As people are living longer, they must ensure they have enough retirement funds to last them through their longer lives. This requires investing with a long-term mindset earlier in life to increase total savings later on.”
We need to be thinking about tomorrow, today and plan for retirement so we can live comfortably and do the day to day things we like as well as have the freedom to travel at will, if we so desire.
We haven’t “worked” since we were in our early 50’s after leaving a bricks and mortar business that took up about 100 hrs a week of our time, it was a 7 day a week business that left us tired and exhausted…on average most people only work 40 hours a week.
You’ve heard of the 40, 40, 40 plan…work 40 Hrs/week for 40 Yrs and retire on 40% of your earnings! It wont be enough in our aging society.
So you might be wondering how we have survived especially as we are still not at retiring age and therefore don’t receive a pension.
What did we do…we found a way to generate income from home.
Disclaimer: I am not a financial advisor, please speak with your own FA. Information sourced from internet.