The Magical Age for Retirement

Written on the 8 April 2024 by Parkside InvestorPlus

Lounging on a holiday, as the world drifts past.

This is your well-deserved retirement, a reward for decades of hard work and careful planning.

But how do you make this dream a reality?

The truth is, there's no magic retirement age that fits everyone.

However, one thing is clear – we're living longer than ever before.

According to the Australian Government Actuary, half of today's 65-year-old men will live to at least 87, while half of 65-year-old women will reach 89 or beyond.

With increasing longevity comes the need for a longer, more financially secure retirement.

Yet many Australians underestimate just how long their retirement will last.

Data from the Australian Bureau of Statistics reveals the average retirement age is around 63 for recent retirees.

With life expectancies pushing into the late 80s, that means the typical Australian can expect to spend a quarter of a century or more in retirement – a substantial portion of their adult life.

This extended retirement runway necessitates careful financial planning well before leaving the workforce.

When approaching retirement, consider what your retirement future entails, and how much money you're going to need for that.

And when should you start thinking about this, the sooner the better, let’s say in your 40s.

One often-overlooked aspect of retirement planning is the risk of an involuntary exit from the workforce due to health issues or job loss.

According to a 2019 YourLifeChoices survey, half of Australian retirees were influenced by work availability or health factors when deciding to retire.

This underscores the importance of having a solid financial cushion in place well before your desired retirement date.

So, how much is enough for a comfortable retirement?

The Association of Superannuation Funds of Australia estimates singles need around $595,000 in savings, while couples require $690,000.

But having a nest egg is just the start – you also need a strategy for making those savings last.

This is where tools like lifetime annuities can play a pivotal role.

These financial products provide a steady stream of income for life, offering peace of mind and helping retirees feel more financially comfortable, as highlighted in a National Seniors Australia report.

Annuities not only provide reliable income but can also boost Age Pension entitlements through favourable Centrelink treatment.

As National Seniors CEO Professor John McCallum notes, "Annuities give you an additional layer of protection for life... They are a critical part of the solution for people without a defined benefit pension and considerable wealth, especially considering the high cost of health and aged care during retirement."

With prudent planning and the right financial instruments, that beach in Bali could be more than just a dream.

It could be the well-earned first chapter of your golden years, a time to savour life's simple pleasures after decades of hard work.

So start crafting your future today – the brushstrokes you make now will shape the vibrant canvas of your future.

If you’re ready for retirement and not sure of your options or if you are a retiree and wanting more positive outcomes in your retirement phase, contact us at Parkside InvestorPlus at (02) 9899 4899.