RetirementI’ve read a number of articles recently questioning whether $1 million dollars is enough for most Aussies to retire on.

My view on this is: it will be for some and not for others. In fact, generalising like this isn’t really helpful to anyone.

First ask yourself: what do I want to be doing in your retirement? Travel the world? Or live in a beach shack on a desert island? For most people the reality of how they want to spend their retirement will be somewhere in between. It may include living in a home that they own, driving a decent car and some overseas travel.

The trick in determining how much is enough lies in doing a few things:

1.       Establish how much you currently need to live on.

2.       Look at your current super balance and project how much it is likely to be when you aim to retire, assuming you stick with your current investment plan.

3.       If there’s a significant gap between the two, adjust the investment plan.

The other factor that this debate doesn’t take into account is any changes that are made to taxation of super investments and interest rates. With so many factors to take into consideration, I’d advise that you set your target slightly higher than the figure you calculate you may need.

In most cases that I come across doing this exercise usually highlights to most people that they haven’t given much thought to what their retirement goals actually are, let alone whether they have the right strategy in place to achieve them.

For those that do have a clear idea of how they envisage their retirement, reviewing their current situation usually results in people making adjustments to their super contributions and/or investment plan. Depending on your current earning potential and the number of years you have before you plan to retire, surprisingly small adjustments can actually make quite a big difference.

The other thing that I frequently see is people, particularly small business owners, not being aware of the most tax effective investment strategies.

If you’re concerned that you may not be on track with your retirement plan, give me a call on 07 3391 1188 or drop me an email and we’ll work through it together.

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