Retire verb
– leave one’s job and cease to work, especially
because one has reached a particular age
- Oxford Dictionary
Gone are the days of compulsory retirement at age 65, when we wind down to a more sedentary lifestyle. More likely, the retirees of today are only ‘semi maintaining an active lifestyle. The era of the new retirement is now.
The way in which we live and save for ‘retirement’ has become much more flexible.
Our income is tax-free
This aspect of the Government’s changes is one of
the most significant to be introduced from 1 July 2007.
If you are over age 60 and receiving income from a taxed
superannuation fund, then this income will be tax-free.
This is a major benefit for retirees, but also makes investing
in super very attractive.
We can work and access super simultaneously –
or not!
These days, if you are over 55 you may be able to access
your super (as a pension) even if you are still working.
We can also continue to work indefinitely with
Australians no longer forced to retire at age 65.
ABS statistics# show that one in every four 60-64 year old
males work part time, indicating that people are continuing
to work for economic or lifestyle reasons.
Also, since 10 May 2006, we can leave our money in super indefinitely because we don’t have to draw down an income or take out a lump sum – it’s our choice what to do with it.
Why saving for retirement is still as important as ever:
We are living longer: The retirees of today have a longer life expectancy than they did 20 years ago. According to the latest ABS data, those aged 65 can expect to live for another 17-21 years on average. That’s a long time to fund your lifestyle if you are not working, so it’s essential to save during your working life.
We are more comfortable with debt: Around 33% of Baby Boomers are still paying off their home mortgage, and this increases to 44% for Boomer couples with children. Also, 53% of those aged 60-64 have credit card debtˆ.
If we are spending more and have more personal debt, then it’s essential to prepare for the time when we may not have the funding to make such repayments.
We are maintaining an active lifestyle in retirement
(ie spending more!):
ABS statistics# show that those approaching retirement
(aged 45-64) spend more on recreation, food and alcohol
than their younger counterparts. If you want to maintain
this lifestyle’s associated expenditure in retirement,
then save as much as possible while you are still earning
an income.
We have not always had compulsory superannuation:
Baby Boomers have not always had the luxury of 9% employer
superannuation contributions during their lifetime, so may
have less saved within super. The latest AMP-NATSEM research
suggests that the average super balance for those aged 60-64
is only $74,000!
| For these reasons, it is essential that anyone approaching retirement save as much as possible. Despite the fact that we have more choices and flexibility in relation to our super and lifestyle, we also need to plan ahead to make the most of these choices. Speak to your Count adviser for help. |
#ABS, 2006b, Labour Force
Australia
ˆ ABS 2003-04
Survey of Income and Housing
Next: Chairman's Report: The value of advice |
As at 17 May, 2007 |
