More than half of Australians with investment properties or shares are proactively preparing for retirement, according to MLC’s Australia today report[1].
In comparison, only 15% of people without investment properties or shares feel prepared for retirement. It’s clear investing is one way to significantly boost confidence in retirement.
The “Retirement-ready” movement
We’ve all read the stories of the retirement funding or super gap, the shortfalls and the large sums of money required to retire comfortably. Rather than feeling overwhelmed by the savings needed and giving up, many Australians are now becoming ‘retirement ready’ by proactively investing in shares and property, well ahead of retirement.
Proactively investing earlier in life is a way to save the concept of a recreational retirement – that blissful hiatus after ceasing work, when you’re healthy and able to enjoy the rewards of your investments.
Re-defining retirement
Today, retirement means far more than ceasing work and/or relevance – it’s a third chapter in our lives where we can finally stop work, or reduce our work hours and pursue some of our dreams. As long as we have the savings and investments required to support our intended lifestyle.
Are you planning a recreational or partial retirement?
How much you’ll need to save and invest depends on the retirement you’re planning. If your primary goal for retirement is to enjoy leisure pursuits, travel and hobbies, you’re planning a recreational retirement, which will cost more in leisure expenses.
If your main retirement goal is to work part-time, commence an ‘encore career’, offer to regularly volunteer or study something new, you’re planning a partial retirement and you’ll be subsidised to an extent by continuing income and potential tax advantages of working beyond age 60.
Continuing work
Pre-retirees and retirees are clearly divided at the concept of continuing work. If you have enough super savings and investments, you can choose whether you want to continue working. But for many, that’s not an option. Many baby boomers don’t want to disappear into irrelevance and they don’t want to step into old age. If you have enough super, you have a choice whether you want to work or not.
Small savings today can give you more control later
Whichever retirement you’re planning, if you want the flexibility to make choices about your future, you’ll need a level of financial power to give you that freedom.
Small reductions in weekly spending can add up substantially over the long term. Increasing your contributions to super, investing in property and shares and seeking help from a financial professional can give you much more flexibility and control over your lifestyle when you retire.
Financial professionals help motivate you to invest
MLC’s Australia Today report found that people who use the services of financial professionals were much more likely to feel prepared for retirement, with a key factor being professionals motivating people to build their super balance.
In a hypothetical question, respondents were asked: “If someone gifted you with $50,000, what would you do with the money?” Those who used the services of a financial professional contributed significantly more to their super than those without professional financial advice.
Contributing more to super can be an effective way to save on tax and provide for a more secure financial future in retirement.
Source: MLC.
[1] MLC and IPSOS, Australia today report, Aug 2016.
