When should you start seriously planning for retirement? No matter how old you are, you’ve likely thought about this question and whether – or when – you expect to stop working full time. Research shows most people in Australia are at the very least expecting to retire. It appears many may have a hard time making this a reality, though, given that only a slight majority are putting money aside to use in their golden years.
According to a study conducted jointly by the American Academy of Actuaries, Institute and Faculty of Actuaries and the Actuaries Institute Australia, roughly 72% of people in Australia anticipate retiring at some point. However, just 55% of these same respondents claim to have gone about the process of saving money. This may explain why only around 23% of Australians say they expect to retire fully, meaning not work in any capacity.
All this raises a very important question: When is the best time to starting actively planning for retirement?
The earlier, the better
According to many financial advisors and planners, there is no such thing as preparing too early. For instance, according to financial planning guru and Forbes contributor Eric Brotman, an ideal time in life to begin is when you’re in your 20s.
“Starting your retirement preparation when you’re as young as 25 means you have time on your side to start building good habits and compounding savings,” Brotman wrote.
Although the costs of living can make saving as much as you’d like difficult it times, every little bit counts. The process itself, however, is quite simple: Spend more than you make. As a general rule, try to live on roughly 85% of what you earn, Brotman advised. The remaining 15% should be put away in some form of interest-earning account or safe investment vehicle.
How much do I need to retire comfortably?
Another question people often have is how much it will actually cost them to retire, as there is always a risk you may outlive your savings. Because various expenses can change from year to year, the unstable nature of price can make arriving at a definitive figure difficult. However, according to the most recent data available from the Association of Superannuation Funds of Australia, most people can live a modest lifestyle on approximately $24,250 per year. For a more comfortable living, however, it’s almost double that at $43,665.
If you have questions regarding retirement, life insurance or superannuation, Gerard Malouf & Partners may be able to help. Contact us today.