How much does a comfortable
retirement cost?
With the Association of Superannuation Funds of Australia (ASFA) estimating couples need $58,922 pa for a comfortable retirement and $34,064 pa for a modest retirement, and singles need from $23,000-$43,000 pa for a modest to comfortable retirement, those who aren’t prepared will face a significant shortfall.1
The cost of confidence is high
It seems we need a very high asset value to feel prepared for retirement. According to Australia today, just over half of people with assets over $1 million dollars, excluding the family home, feel very or fairly well prepared for retirement. Meanwhile, only 34% of people with between $500,000 and $1 million net investable assets feel very or fairly well prepared and only 7% of people with less than half a million dollars feel prepared.

It’s an extraordinary amount of money and the cost of achieving confidence in your retirement plans is high.
Australians are topping up their super
Most likely due to this uncertainty about having enough super, and the potential tax advantages, many Australians are topping up their retirement savings. Twenty-nine per cent of respondents made additional contributions to their super funds in the 12 months preceding the release of Australia today.
Retirement preparation is more than having
a super lump sum
Many Australians are accumulating sizeable super balances but are still feeling unprepared – probably because retirement preparation is about far more than having a super lump sum. Many of us will need help working out how to invest the money intelligently and how to spend wisely to make it last.

Knowing whether your super will be enough requires help from a financial professional, unless you’re prepared to do a lot of research yourself. You’ll need to work out how your money will be invested while you draw down from it, how much you’ll need to support the lifestyle you choose and how that lifestyle will change as you age.
How you can access your super once
you retire2
When you reach preservation age, you can access your super as long as you are permanently retired (or have reached age 65). If you haven’t permanently retired, you can still access part of your super via a transition to retirement pension.
How much will you get?

Your final retirement benefit is determined by:

â�� your employer’s super contributions over your working life
� your own additional super contributions
� your investment returns
� the tax amount you pay, and
� the amount of fees you pay through your super fund.

How you get paid is up to you
You can choose to take your super as a lump sum, as a retirement income stream, or a combination of both. If you choose to receive your super as a regular income stream by rolling it into an account-based pension, the money that you’re not accessing in an account-based pension continues to work for you in a tax-effective environment.

When can you receive the age pension?3
From 1 July 2017, the qualifying age for the Age Pension will increase from 65 years to 65 years and 6 months. The qualifying age will then increase by six months every two years, reaching 67 years by 1 July 2023.

Your super last longer with professional help
Laura Demasi, Research Director for the Australia today report comments: “People’s lifestyles in retirement, their confidence and security is mainly about super. People who may experience the biggest change in lifestyle in retirement may be women and lower social grades. Downsizing will become essential for many, and without enough super, their primary home will have to pay for their retirement.”
“The earlier people engage the help of financial professionals, the more likely they’re to feel confident about their future and their retirement lifestyles. Building the biggest super balance you can is one half of the equation, then it’s about getting professional help to make it last.”

Sources:
MLC and IPSOS, Australia today report, Aug 2016. https://www.mlc.com.au/
personal/retirement/australia-today
1 ASFA Retirement Standard, March Quarter 2016.
2 ASIC MoneySmart; Getting your super, August 2015.
3 Australian Department of Human Services, Age Pension, 21 March 2016.

General Advice Warning: Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

A stitch in time couldsave you $1,000s whenit comes to super
Sally Tindall, Money Editor, RateCity.com.au discusses how even small regular super contributions can add up to a more secure
future.

Are you prepared for the future?
For many Australians, life in retirement is set to be a lot tougher than they think.

That’s because while most people expect to have enough funds to finance their post-work dreams, in reality the average Australian is currently retiring with a super balance of just $207,9501, according to 2015 Roy Morgan research.

That equates to just $28 a day over a 20-year retirement –barely enough to cover the essentials of life like food, clothes ,transport and a small bar heater in winter. So why are so many of us falling short when it comes toretirement planning?

Perhaps one of the main problems is our “she’ll be right” mentality. A recent RateCity and SuperRatings survey2 shows that just one in five people are worried about not having enough super. This means the remaining 4 out of 5 people either have enough in their super account to lead the retirement they want, or they’ve just assumed that holding down a steady job for the better part of their working life should suffice. It’s this mentality that needs to be challenged.

The truth is we’re all feeling the pinch these days, including the government, so you can’t be sure that the pension will always be there as a plan B.

Making additional concessional [pre-tax] contributions into your superannuation is one of the best ways to fund a potential shortfall and the best time to start is in your early twenties. A large part of this rationale is based on the power of compounding interest – the longer you invest your money, the more you’ll make. But there’s also another key reason: it’s far easier to find spare change on a disposable income than it is when you’ve got a handful of dependents and a mortgage to pay. As soon as these two factors set in, you could be strapped for cash for the next couple of decades.

It all adds up
The process for making extra super contributions is relatively straightforward and keep in mind, you don’t have to lock up big amounts to get a noticeable financial boost in retirement. Indeed, it’s the small weekly sacrifices that will make all the difference by the time you reach the end of your working life. Before you decide to invest more in your superannuation, you should consider the contribution caps that apply to different contribution types and the penalties that may be payable if you exceed the applicable cap.

Based on a 30-year-old earning $80,000 who is planning on retiring at 65, one fewer coffee a week, at a cost of $4, could translate into more than $12,000 extra in retirement. Better still, the simple act of taking a packed lunch to work one day a week, saving an estimated $15 and contributing it to super, could add over $46,000 to your super balance over 35 years. Add to that a few more of life’s luxuries that you’re willing to forego occasionally and your extra contributions could start doubling, or even tripling.3

Once you’ve decided to make extra contributions, stay on track by keeping an eye on your super balance. RateCity research4 shows that almost 50% of people don’t actually know how much they have in their superannuation. Based on this, it’s perhaps no surprise that so many Australians are only working out that they’ve fallen dramatically short when they’re just about to retire.

It’s also important to remember that superannuation is a complex product and what works for one person may not be right for another. Seek professional advice on the best way to maximise your contributions as an expert will be able to give you an idea of government schemes or tax benefits that may be able to assist.

Sources:
1 Roy Morgan Single Source Superannuation survey, Nov 2015
2 RateCity/SuperRatings superannuation survey, Feb 2016
3 http://www.ratecity.com.au/infographics/news/superannuation-would-youhappy-
living-on-just-28-a-day
4 RateCity/SuperRatings superannuation survey, Feb 2016
This article has been prepared by RateCity Pty Limited ABN 12 122 743 524
AFSL 316710. The information is current as at 02/08/2016 and may change.

General Advice Warning: Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.