Approximately 65% of Australians will start their retirement journey at least partly supported by the government Age Pension. The remaining 35% are usually referred to as self-funded retirees, meaning that they are covering their retirement with their own savings, superannuation, share or property investments. They are totally self-sufficient.
But the name ‘self-funded retiree’ can be misleading as it is often conflated with ‘high net worth individuals’ which can bring on a debate about tax concessions on super, franking credits, intergenerational wealth – even the so-called ‘greediness’ of the boomer generation.
These allegations are far from accurate – merely a cliched way to refer to a large cohort of older Australians who often have very little in common, including their net wealth. A recent example of this debate is the ‘argy-bargy’ about the proposed additional 15% tax on super balances over $3-million. It’s easy to believe that this amount is the common balance for those who are self-funded. It’s not – it’s way above the reality for most people. Fewer than half of one per cent of retirees (80,000) will be affected by the new $3-million threshold. Most other self-funded retirees typically have super and investment assets worth about one third of this amount. They, too, need to plan ahead and make informed choices to live the retirement they envisage. Today we shine a light on the five most important actions which can help self-funded retirees to ensure they enjoy the retirement that they have saved for.