The average retiree in Australia is sadly struggling with a much lower super balance than the amount recommended by Australian Superannuation Fund Association and more than 70 per cent of Australians over the age of 65 rely on the full or part age pension as their primary source of income when they retire. Superannuation for most of today’s retirees will act as a supplement only.
The suggested superannuation balance for couples wanting to live comfortably sits at $510,000 and for a single sits at $430,000 whereas in reality the average male retiree today has only $197,000 in their super accounts and female has $105,000.
So if you look like the average retiree today, you are limited to what you can achieve with the savings you have. But how much do you need, and how much will create a reasonable retirement, should you be in these entirely “average” circumstances?
The golden rule of retirement withdrawals said that if retirees withdraw 4 per cent from their savings every year (or $4 for every $100 that they have in retirement savings), adjusted for inflation, their nest egg should last 30 years. Sadly, last year, in a report issued by the Financial Services Institute of Australia, FINSIA revised this number down to 2.9 per cent per annum for a balanced portfolio to ensure that the savings last for a 30 year retirement. Any faster and they believe that people will run the risk of running out of retirement savings before they die, and nobody wants that to happen.
So when calculating a retiree’s potential income this number is always of critical concern. But there are also three other important things you need to think about when planning for your retirement drawdown levels:
Has anyone ever suggested to you a “safe” drawdown rate for your superannuation?
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