The Retirement Problem: Why relying on the pension doesn’t cut it

We all believe retirement should be a time for relaxation and enjoyment after years of hard work. But for many Australians, that dream is becoming harder to achieve. Why? Because they’re not retiring with enough Super to live the lifestyle they wanted and having to rely on the pension instead. Let’s dive into this problem and see why it’s a big deal.


Most People Still Need the Pension

A staggering 63% of Australian retirees are dependent on government pensions as their primary source of income. On the surface, this might appear to be a great safety net, but the reality tells a different story.


Living Just Above Poverty

Imagine trying to buy everything you need every week with just a little bit more money than what keeps you poor. That’s what’s happening. The weekly pension in Australia is only $59 more than what’s considered the poverty line, and that’s for a single person. For couples, it’s actually considered below the poverty line. Is that the retirement you have dreamed of while working hard all this time to provide for yourself and your loved ones?


Have You Checked Your Future Money?

When was the last time you sat down to look at how much money you’ll have when you retire? Many people don’t do this, and it’s a big mistake. You need to know if you’ll have enough money to live comfortably, or if you’ll face a money problem when you stop working.


Not So Super Funds

In addition to inadequate pensions, Super funds are showing a lack of growth. If these funds aren’t growing well, that means you’ll have less money when you retire. From December 2021 to December 2022 – there was no growth recorded in Super at all. When you think about the contributions going in from employers each month (10.5% of all wages) – that’s actually your super going backwards. As of 2023, Super funds have resumed growth, but given their reliance on the volatile stock market, this raises questions about their long-term stability.


What Does All This Mean?

So, what happens if you don’t have enough money when you retire? It’s pretty simple, you might have to keep working far longer than you thought. Or, you’ll have to live a much simpler life than you planned. You might not be able to travel, eat out, or even pay for basic things like good healthcare.


Proactive Steps to Take

Review Your Super: An occasional, comprehensive review of your Super can provide insights into whether you are on track for a comfortable retirement.


Plan for the Long-Term: Retirement planning shouldn’t be an afterthought. Be proactive in projecting your future financial needs and devise a savings strategy.


Explore Alternate Avenues: Retail Super Funds and the share market are not the only path for your Super. Consider looking into other investment opportunities that could supplement your income later on – like property for example.


We remember finding this out and realising we were personally a long way off to a happy retirement and took steps to change that. It’s why we do what we do – how far off are you?

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