Retirement planning.

Retirement, superannuation and expenditure.

The two problems facing people today, who are facing retirement, are the total amount of superannuation they will be entitled to upon retirement and the level of expenditure they will incur in retirement.

The Superannuation Guarantee level of 9%, even if you have been receiving superannuation for a number of years is not going to provide you with sufficient capital to self fund your retirement.

How much capital do I need?

How much capital will you need to make you independent in your retirement, if you aim to retire at 65, and will need $40,000.00 income to live the lifestyle to which you have become accustomed to, you should multiply the $40,000 by a factor of 15, which will give you capital required of $600,000.00.

To improve your chance of reaching this goal you should ;

• Appoint a Financial Planner to guide you along the path of success.
• Start saving as early as possible in life.
• Start saving as much as possible.
• Get the right advice on investments and invest wisely.
• Regularly meet with your financial planner and review your investments.

What should younger people do?

Younger people should be looking to invest in growth assets rather than immediate income assets and are able to take an aggressive approach to investment, older people nearing retirement should be investing to maintain their capital intact as they do not have any real prospects to replace any lost capital.

What if I am retired?

Retirees have a wide choice of investment decisions as to how they can use their capital to fund their retirement;

• They can keep investing privately and live on the income generated with the occasional sale of an investment to supplement their needs.
• They can set up their own superannuation fund before retirement and draw down an "Allocated Pension"
• They can invest their Superannuation monies with one of the many commercial providers of Allocated Pensions or use two or more providers to diversify risk.
• They can invest in Life Time Annuities, where a Life Insurance Company agrees to provide the Annuitant with an income, usually indexed, for the life of the annuitant or reversionary to the remaining spouse upon the death of the annuitant.
• They can invest in or run through their own Self Managed Superannuation Fund a Complying Pension, this is a pension for the pensioners Actuarial Life Expectancy which is calculated by an Actuary and can be indexed and the theory is that the fund is exhausted upon the pensioner reaching the predetermined age.

Life Time Annuities and Complying Pensions are not counted as assets by Centrelink when calculating entitlement to an aged pension.

Do not try to make up for past inactivity by attempting to make up for lost time by investing heavily in negative gearing options as you approach retirement.

Aim to enter retirement without debt, the house mortgage is paid off, no credit card debt and no other liabilities.

Have a current will and give a power of attorney to someone you can trust to look after your affairs in the event of you becoming incapable.

 more about self managed superannuation