5 Facts You Need To Know When Building Your Retirement Nest Egg

Given the demands of everyday life, planning for your retirement and more specifically, building a retirement nest egg, may be a relatively low priority. You may think that you still have plenty of time, but before you put off planning for your retirement any longer, here are some key facts you should consider.

Your retirement could last 30 years or more

A male, currently aged 65, has a future life expectancy of 19 years and for females, currently aged 65, it’s 22 years. But these are just the averages, (so half of us should live longer) and they are increasing steadily. As these trends continue, your retirement could stretch to three decades, or maybe even longer.

You shouldn’t rely on the age pension

The full single rate age pension only provides around 25% of average weekly male earnings. That will only give you a very basic existence. What’s more, qualifying for the age pension may become more difficult in the future. Given that our population is ageing, statistically there are more people who are of pension age. With limited government resources, one would imagine that the rules will get tougher and they already have.

You shouldn’t rely on an inheritance

Your parents may end up spending all of their savings and may even need to downsize their home to help make ends meet. We are finding this more and more common as aged care costs continue to climb and as people live longer their wealth is eroding fast. So, if you’re relying on an inheritance to fund your retirement, you could be disappointed. 

You might not have enough super either

With some of your money going into super through compulsory employer contributions, you’re off to a good start. But if you are assuming that those employer compulsory contributions will mean you will have enough super to get you through your retirement, then you could be in for a nasty surprise. Research conducted by Rice Warner Actuaries revealed that Australia has a shortfall in super of close to $1 trillion.This means that many Australians will not have enough super to fund their retirement.

Start planning now

Thankfully, with a bit of preparation, it’s possible to plan for a long and comfortable retirement. Strategies like salary sacrificing into super, making lump sum contributions, spouse contributions, or using a transition to retirement strategy are all smart strategies to consider, to help boost your super. Some of them may have some immediate tax benefits too. Once you reach preservation age (currently 57yo) it’s also possible to use your super to start a pension that pays you a regular income. Some pensions even guarantee to pay you an income for the rest of your life, negating the risk of outliving your savings.

Talk to a retirement planning expert

If you want to start building your nest egg, or if you want to see if you are on track to having enough for retirement, you should speak to a financial adviser. They can help you set realistic goals and put a plan in place to achieve them.

Call Potts & Schnelle now Ph 02 60332233 and make an appointment to discuss your personal situation with one of our financial planners.