It is now a common realisation that Australians have to plan for their own future and retirement as our economic situation is not going to handle the explosion of ‘Baby Boomers’ hitting the pension market. In the 1950’s and 60’s there were eighteen taxpayers to every pensioner. In the 90’s there were six taxpayers to every pensioner. It is estimated that by 2020, there will be one taxpayer to every pensioner.
Clearly, one taxpayer will not be able to support a pensioner, as well as contribute to community services (such as roads, hospitals, healthcare systems and education) for future generations.
The Australian Bureau of Statistics has shown that 80% of the population will retire on less than $14,000 per annum and only 3% currently retire on more than $40,000 per annum.
At today’s interest rates, a retirement income of $40,000 would mean an investment of approximately $1,000,000. If you calculate this forward at an inflation rate of 4% over twenty years, the average Australian would need at least $2,000,000 invested, in order to receive the equivalent monetary value of a $40,000 pension today.
Have you actually sat down and worked out:
- How much money you need in retirement.
- How long before you plan to retire.
- What savings you have now, and
- Therefore, how much you need to be saving (or accumulating in wealth) each year to achieve this.
We always recommend that you seek professional advice as this blog is for general information only