3 Myths About Retirement in Australia - Coastal Advice Port Macquarie
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Retirement Myths

3 Myths About Retirement in Australia and Why You Need to Know the Truth

Author: Janelle Kirk

People have so many options when it comes to their retirement. Whether you’re hoping to travel, take up a new hobby or two, or relax on a beach somewhere – the world is your oyster.

But your perfect retirement will take time and energy to plan. While there are no guarantees about the future, there are steps you can take to make your future financially secure. That is where retirement planning comes in. Consulting with a financial adviser is a great way to plan your money and finances for the future so you can live the life you want when it’s time to finish work.

However, there are many myths about retirement in Australia that can be confusing, induce stress, and deter many of us from even starting a retirement plan. This is especially common when people are considering the income they may need in retirement – is it really $1 million? We’ll get to this soon.

But as the common saying goes: If you do nothing, nothing will change.

To secure your dream retirement, you should understand that myths are exactly that – myths!

From there, you will have the right mindset and can arm yourself with the right knowledge to prepare for your financial future.

Here are the most common concerns about retiring in Australia and the truths behind them:

Myth 1: The Majority of Your Retirement Savings Will End Up Paying for Health Care

Indeed, healthcare is one of the top concerns and expenditures of every retiree. What’s more, is that the cost of healthcare becomes more expensive every year which means this is something you should be preparing for before retirement.

It makes sense that as we get older, we will have to pay more for healthcare and medical costs. No matter how healthy and fit you are, you can never predict when you will have a medical injury or emergency.

However, that doesn’t mean that all of your retirement savings will go towards paying for medical expenses.

If you have a thorough plan and estimate of how much you think health expenses will cost you, you can plan around this and be sure that your money is being spent where you want to spend it.

Top tip: There are subsidy programs for health and aged care in Australia. Senior Australians with private health insurance get rebate amounts. That means every retiree who needs help with their healthcare will get it. Plus, older Australians may also be eligible for either the Commonwealth Seniors Health Card or Pensioner Concession Card.  No one will be left behind.

Myth 2: Unless You Have One Million Dollars, You Cannot Retire Comfortably

The age-old question: Do you really need $1 million to retire in Australia?

It’s one of the most common questions we hear as financial planners.

While it’s commonly thought that $1 million is the target for Australian retirees, this is not always the truth. Some Australians won’t need this much in their savings and some of us may need much more. The amount you will need for your retirement will be completely unique to you.

You need to consider the fact that people have different lifestyles. Some may love luxury, while others favour simplicity. Some may live in a more expensive city, while others prefer a quiet country town. The amount of savings you need varies and depends on your retirement goals, preferences, and priorities.

When it comes to the standard budget for a comfortable future life in Australia, the ASFA’s Retirement Standard says that an individual would need $505,000 in their super fund to achieve a comfortable retirement. For couples, however, due to many shared expenses, it is estimated a couple will need a shared amount of $640,000 in their super funds.

However, note that these numbers may change depending on the economic situation and other factors. For the amount you personally should have in your super fund, you may like to consider talking to an experienced financial adviser who can provide far more personalised advice.

Myth 3: Do Not Touch Your Savings! Keep It in Cash

When it comes to retirement, everybody tells you that you need to save. When you are young, this may mean you save your money in a bank account and promise not to use them for other expenses.

While a bank account will ensure your money is safe, you don’t tend to gain a lot of interest or have the ability to grow your savings in this format, especially in the current environment where interest rates are at an all-time low.

If you want to grow your money further, you should consider investing it. Starting a diversified investment portfolio can help to grow and protect your money for retirement so you can feel confident and secure you will have enough.

Unfortunately in life, there is no guaranteed future. Anything can happen from now onwards.

However, that does not mean you cannot prepare for the unexpected. Preparation is key to your success in your golden years. With early retirement planning, you can have more time to invest and grow your money.

Seeking help and guidance from financial advisers can help you make wiser decisions and ensure that your endeavours will lead to your retirement dreams.

For your retirement financial planning needs, contact us at Coastal Advice Port Macquarie. Our strategies can help you find success and security. Book a complimentary meeting with us today!

REFERENCES
https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/insurance_rebate.htm
https://www.servicesaustralia.gov.au/individuals/services/centrelink/commonwealth-seniors-health-card
https://www.servicesaustralia.gov.au/individuals/services/centrelink/pensioner-concession-card
https://www.superannuation.asn.au/resources/retirement-standard

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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