When Laura was 50, she didn’t know what to think about retirement. “One part of me was eager to stop working and just put my feet up. But the other part of me was terrified,” Laura says.
“I was scared that my savings were not going to be enough to sustain me and I wasn’t sure what the right time would be for me to downsize.”
“Looking back, I realise that retirement is nothing like I ever imagined. I think that no one will have an accurate idea. It’s something you would have to experience to understand completely,” Laura says.
Laura wasn’t the only one affected by retirement myths. In fact, these myths about the golden years are causing unnecessary worry for Australians and the misinformation is scaring people.
Here are some common myths surrounding retirement:
1. I will spend less when I’m retired
Sure, your house may be paid off by then, and you will no longer have to shop for working clothes or pay for the daily commute. But the truth is, many people end up spending more than they expect during their golden years.
You finally feel like you have the time to do all things you’ve ever wanted like travelling, spending time with the family, coffee with friends, learning a new skill or picking up a new hobby – and those things need money.
And lets not forget medical care or things like physio, counselling and health programs to keep you fit as a fiddle. At least, you’ll enjoy the senior discounts on public transport, movie tickets, meals, and even property taxes.
2. I won’t be eligible for a health card
Many mistakenly think that their assets will make them illegible to get the Commonwealth Seniors Health Card. But according to Goldsborough Financial Services director John Oliver, the health card is tied to an income test – rather than an assets test. Retirees earning less than $80,000 as a couple or $50,000 for a single would be eligible.
He says there is a lot of misunderstanding about other pension rules and thresholds, when in reality a couple can have $700,000 of assets and still receive about $17,000 a year of age pension.
3. I need $1,000,000 to retire comfortably
Money Morning reports, The Australian Institute of Super Funds, and AustralianSuper, say it’s a myth that you need $1 million in superannuation for a comfortable retirement. Apparently, this figure has been distorted and inflated by people and industry bodies who have vested interests in maximising funds under management. According to a paper, with a super account balance of less than half that recommended $1 million, a couple could just about live comfortably.
4. I’ve got Centrelink to back me up
It’s great that we have Centrelink but did you know that the maximum Centrelink age pension and pension supplements, pay about $22,000 to a single and $33,000 to a couple? Can you afford to live on that?
“You can’t rely just on Centrelink – $33,000 a year for a couple is a reasonable starting point but not many people in this day and age can live on that,” Theo Marinis told News.com.au.
“The standard of living of the Baby Boomers has increased.” Most new retirees today have some sort of superannuation nest egg to supplement their pension payments.
5. I’m going to have so much time doing nothing
Don’t look at retirement as a punishment. Yes, you won’t be work-busy but you do have a lot of things that you can do like travelling, spending time with family, enjoying a new hobby or pursuing an old one. The choice is yours and the key is to keep connected and keep active.