The recent release of the Treasury’s Intergenerational Report, projecting how the economy and population will look in 40 years, has raised the importance of planning and preparing for a sustainable retirement.
Ryan Dobbrick Principal Planner of Cotter Financial Services, believes the Report is a wake-up call for Australians to seek quality professional financial advice, especially when planning for retirement.
“In the next 20 years potentially more than 100,000 extra people will retire each year, there has never been a greater need for Australians to plan their retirement. In the last financial year the number of people over 65 years of age has increased by over 100,000 people. Further, the Intergenerational Report estimates that the number of Australians over 65 will double by 2055,” Mr Dobbrick said.
As well as the impacts of our changing population that are highlighted in the Intergenerational Report, Mr Dobbrick has witnessed some alarming trends and issues that are not being considered when it comes to retirement planning. Many people are underestimating the funds required for their retirement years. A benchmark of almost $60,000 per annum is required for a couple who own their own home to live a comfortable retirement. Only around half of pre-retirees have started thinking seriously about retirement before reaching 55 years of age.
Mr Dobbrick believes that starting your retirement planning early can help you make the most of your savings and potentially reduce your reliance on the Age Pension, so you can live the retirement of your dreams. Currently on average people are waiting until just seven years from retirement to begin planning. Planning for longevity is particularly important with life expectancies predicted to increase from 91.1 to 95.1 years for men and 93.6 to 96.6 years for women by 2054/55. Further, it is expected there will be over 40,000 people living to over 100 years of age by 2054/55.
Mr Dobbrick hopes that the Intergenerational Report will be the catalyst for pre-retirees to seek professional financial advice about their retirement. “Our ageing population and a massive reduction in the number of working age people per every person over 65 means more people are or will be living in retirement with greater demands on fewer taxpayers (currently there are 4.5 working Australians supporting 1 person over 65, with this expected to decrease to 2.7 in 2055, compared to 7.3 in 1975). This demographic trend will place enormous pressure on Australia’s Aged Care and Healthcare spending highlighting the importance for Australians to plan a self-sufficient retirement.”
Mr Dobbrick says retirement is so much more than just superannuation and there are a number of retirement strategies that can be implemented to make the most of your circumstances and retirement wishes. We aim to help individuals or couples to articulate what they would like their retirement lifestyle to look like and whether or not they have the cash flow or assets required to fund that lifestyle within their desired time frames. Starting your planning early is crucial in enabling you to implement strategies now to work towards your overall financial goals.
A retirement plan should consider both your Estate Plan, as many people reaching retirement age also have financial dependents, as well as your Aged Care plan. “My role is to act as your central coordinator, taking an overarching view of your entire financial life and providing advice and insights about how the choices you make in the short-term could affect your financial freedom in the long-term,” Mr Dobbrick said.
For more information to help you create a Retirement Plan that is compatible within your overall Financial Plan, contact Cotter Financial Services.
Ryan Dobbrick is a financial adviser at Cotter Financial Services. Cotter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 Australian Credit Licence No 357306 trading as Fortnum Financial Advisers.
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Cotter Financial Services strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
Sources:  http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary  ABS 3101.0 Australian Demographics Statistics June 2014  http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary  AFSA Retirement Standard www.superannuation.asn.au  REST – The Journey Begins Report www.rest.com.au   AFSA Retirement Standard www.superannuation.asn.au  Colonial First State Presentation – Understanding Baby Boomers https://prezi.com/ruiiohivo6bt/understanding-the-baby-boomers/?utm_campaign=share&utm_medium=copy Slide 91  http://apo.org.au/files/Resource/2015_igr.ashx_.pdf – Executive Summary