Your retirement journey is likely to be as quirky and individual as you are. But whilst most of us love fun and adventure, volatile cash flow is not the type of adventure we would embrace. Predictable income becomes even more important in retirement when you can’t make up shortfalls by working harder or earning more.
Today we consider the ways to successfully budget for your entire retirement journey which, for many Australians could be a 20-30 year life stage.
Federal Budgets can seem a long way removed from our day-to-day lives. Telephone book number expenditure is often quoted on some very abstract projects (infrastructure? cyber safety? border security?) which are hard to relate to. But the money that is allocated in the annual budget will eventually have a major tangible impact on your quality of life; your health, wellbeing and retirement affordability.
That’s why the team at Retirement Essentials has strong views on the things we think could be done to make a huge difference for older Australians. Yes, budget spending is current account (spending money raised from taxes from those currently working). So there is always some discussion around the ‘fairness’ of using revenue from younger taxpayers to fund more services for older Australians. This can be a false argument, though, as nearly every older Australian has paid more than their fair share of investment, across the decades, in roads, airports, childcare and the environment to ensure a better future for younger generations.
Our team also isn’t advocating massively expensive projects (no AUKUS here!). Instead we are looking at the ways the current retirement income system could be improved – for very little outlay. Ways to ensure that retirees are able to remain active and productive for much longer. This includes allowing them to work more – which would significantly benefit the nation’s productivity if it came to pass.
So read on for our thoughts on what Treasurer Jim Chalmers should announce on Tuesday 14 May – and we encourage you to share your thoughts on anything we may have missed. It’s helpful to remember that the Retirement Essentials’ team is in touch with every day retirees, every working day. This means that we are fully exposed to your concerns, needs and annoyances when it comes to managing your retirement income. As always, we’re on your side when it comes to making Australia’s retirement income system work better, sooner.
Most of us are open to doing the maths and setting goals if we believe those goals are achievable. Resistance can set in, however, if we think that the targets are unrealistic. It could be that this has become the case with the commonly accepted quarterly ‘Retirement Standards’.
These Retirement Standards (published by the Association of Super Funds Australia or ASFA) were updated late last month, to reflect price changes through to 31 December 2023.
The Retirement Standard suggests two levels of retirement lifestyle; modest and comfortable.
The table below contains the suggested amounts required per week and per annum for those aged 65-84, for each of these retirement lifestyles.
Advocacy group, Super Consumers Australia (SCA) also shares targets for retiree spending. These targets have three levels, low, medium and high which are listed in the table. We’ve also included the full Age Pension rates (including supplements) and median super rates at Age Pension qualification age and when many Australians retire (ages 65-69).
The reason for including these seemingly conflicting amounts is to set the scene for a discussion about how YOU can work out what is a reasonable spending pattern in retirement and whether your current savings will allow you to maintain this cashflow level.