Retiring Comfortably – 2024 & Beyond

Written on the 5 December 2023 by Parkside InvestorPlus

As Australians approach retirement age, and not necessarily 65, the holy grail is to retire comfortably, meaning you can enjoy a lifestyle that allows you to savour life – hobbies, restaurants, local getaways and even the odd indulgent overseas trip.

Recently the Association of Superannuation Funds (ASFA), released its projections for what constitutes a ‘comfortable’ retirement, i.e. how much do you need in your super tank to retire comfortably.

Their findings were as follows:

For individuals, $595,000 was required in their super balance.

For couples, $690,000 was required.

However, the Australian Taxation Office (ATO), states that the average Australian male aged between 60 and 64 has $402,838 in super, while women the same age have $318,203.

This also assumes retirees have access to full or part access to age pension as the balance is drawn down.

1 in 2 Retirees will achieve a comfortable retirement by 2050

However, what exactly defines a ‘comfortable’ retirement.

Again, according to ASFA, a comfortable retirement would typically include:

Daily essentials, such as

o   Council rates

o   Utilities

o   Insurance

o   Home repairs & maintenance

o   Not skimping on groceries

Travel, including

o   Fuel

o   Car ownership costs

o   Public transport

Clothing & footwear

Health, includes

o   Health insurance

o   Gym membership

o   Pharmacy costs

o   Doctor/specialist visits

Connecting with family

o   Phone, computer, internet

o   Domestic flights

o   International holiday

What factors lead to a comfortable retirement?

A new report from the ASFA indicated that at least 30% of singles and couples can exceed the thresholds for a comfortable retirement (mentioned above).

How?

“Through strong investment returns together with the super guarantee (SG) reaching the legislated rate of 12 per cent in 2025 will help more Australians achieve a comfortable and dignified lifestyle in retirement, but account balance data indicate that many Australians still have a long way to go in achieving that goal,” the report wrote.

By 2050 though, the report indicates that 50% of Australians will reach the milestone of a comfortable retirement super balance.

What if you are already in the retirement phase?

If you are very close to approaching retirement or are already retired, there are some changes in legislation that may impact you, such as:

• Downsizer eligibility, reduced to age 55
• Home proceeds exemption and age pension
• Assistance for working age pensioners

Downsizer eligibility

From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home.

Home proceeds exemption and age pension

An assets test exemption may apply to proceeds from the sale of the principal home.

The exemption applies to the portion of those proceeds which are intended to be used to purchase, build, rebuild, repair or renovate a new principal home.

Currently, this exemption period was 12 months and has been extended to 24 months from 1 January 2023.

Assistance for working age pensioners

Legislation has passed that allows Age Pensioners to participate more in the workforce.

Seek advice Retirement Advice

The legislation around retirement and retirement benefits is an ever-shifting landscape, what you thought you could do is probably not correct and more importantly, you may not know what you can do to bolster your retirement life phase.

Parkside InvestorPlus has helped many Australians approaching retirement and those who are already in retirement.  If you have any questions or are unsure, contact  us at (02) 9899 4899.