In 1996, approximately 120,000 Australians over the age of 65 were still part of the workforce. Today, that number has leaped to approximately 465,000. This jump means that 10 years ago, 1 in 18 Australian seniors were still working over the age of 65 compared to 1 in 8 today. With the uncertainty surrounding changes to Superannuation and the ever rising pension age, it is more important than ever to plan for your retirement.
Currently, we need to be 65 years old to access the Age Pension and pass an income and assets test. If all the requirements are met, Australian seniors are entitled to $20,664 per annum for a single, and $31,153 for couples. This is approximately $275 per week less than the Australian minimum wage.
Employer superannuation contributions were only made compulsory in the early 90’s, leaving the 60+’s of today finding themselves in the daunting situation of not having enough superannuation to comfortably retire, leaving them either financially depended on their children or forced to continue in the workforce.
Today, we are fortunate enough to have a 9.5% employer compulsory super contribution, but will this be enough for you to comfortably retire? Depending on your age and stage in life, retirement can seem like a lifetime away, but it is important the groundwork is made early on to ensure that you have options in your retirement. You may want to work until you are 70… but you may also want to retire and see the world in the twilight of your life.
According to a survey performed by the Australian Bureau of Statistics, a large percentage of Australians retired before the standardised age of 65- women at 56 and men at 58. the reasons vary, but largely include not being able to physically keep up the demands of full time work, or either mental or physical illness.
So how do we decide if we are going to be financially secure in our retirement? An easy way to get an idea of your financial health in retirement is to calculate your worth (with taking out your family home) at both ages 57 and 65. This figure is often a daunting one, with families making the assumption that they will be ‘fine’ in retirement, without having the proper plans in place.
Having an investment portfolio that will earn you a passive income to support your retirement is a key way to ensure that you can retire comfortably, and on your own terms. Whilst having a diverse portfolio is important, property is less volatile than other investments and has a proven track record of producing substantial returns.
According to ASX Russell Investments 2016 Long-term Investing Report; Australian Residential Investment Property has been the top performing asset class over the last 20 years. Over the last 20 years – property produced a gross return of 10.5% p.a before tax.
Starting an investment portfolio early is integral in ensuring that you are not only self-reliant in your retirement, but that you can retire when and how you choose.
Contact the Solid Group offices for information about how we can help you build your investment portfolio and create a solid plan for your retirement on (03) 9690 2666.