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Adam Davenport
Adam Davenport

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Melbourne

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‘Closing your eyes and hoping for the best’ won’t save you financially come retirement; sound planning and preparation will

The information in this article is superseded by the latest superannuation information published in our article, Everything you need to know about superannuation to live the dream.

Are you a part of the large proportion of Australians who feel only ‘somewhat’ financially prepared for retirement?

A recent report (1) released by super fund, REST, surveyed 1000 Australians over 50 who were not yet retired and found that the majority of respondents didn’t have enough super to support a ‘comfortable’ retirement, with 74 per cent admitting they didn't know how much superannuation they would actually need to be able to retire.

The latest estimate from the Association of Superannuation Funds of Australia revealed that a couple needs a combined super balance of $510,000 while an individual needs around $430,000 to fund a comfortable retirement (2). These figures are concerning across the Baby Boomer landscape with a quarter of the demographic having current account balances less than $50,000.

Surprisingly, the report also found that while superannuation was identified as the most expected source of retirement income, 48 per cent of those surveyed hadn’t sought formal financial advice to best inform their retirement plans. This unwillingness to adequately plan for retirement was due to a range of individual uncertainties, which impacted on the overall sentiment of pre-retirees.

Take the hard work and worry out of preparing for your retirement

Receiving financial advice about your retirement plan doesn’t have to be a complicated or daunting process. Whether you’re many years or only a few years off retirement, sound financial advice from a trusted and qualified financial adviser can help you prepare for your own retirement effectively, with tailored strategies to suit your individual situation; including dealing with any government, policy or tax changes in the future.

Smart Strategies available include:

Salary sacrificing

Salary Sacrificing is an arrangement in which an employee agrees to have their wages cut, in exchange for additional employer superannuation contributions. The main advantage of choosing this method is that it’s a tax effective way to increase superannuation assets, as they are made from your pre-tax salary. This allows a greater proportion of every dollar sacrificed to make its way into your superannuation fund, preparing you for a more comfortable retirement.

Converting superannuation to a TtR Pension

A TtR Pension is a type of income stream which allows people who have reached preservation age to access their superannuation while still working. Converting your superannuation to a TtR pension allows you to transfer a significant portion of your assets to the tax-free pension environment.

Taking advantage of Super Contributions Caps

As the average life expectancy and the cost of living continue to increase, the age pension alone will not be enough for a comfortable retirement lifestyle. You can maximise your super by making after-tax super contributions (depositing your personal money into your super account), applying for the government co-contribution if you fall into the low income earner category or if you’re self-employed, you can claim a tax deduction when you contribute to your super.

To discover more retirement strategies, prevent financial uncertainty and to take control of your retirement plan; book in for a free financial health check today.

(1) REST (2014) The Journey Begins white paper: Australia's Journey to Retirement, June 2014

(2) The Association of Superannuation Funds of Australia Ltd Media release: 31 January 2014 ‘Higher cost of living increasing pressure on retirement savings: ASFA Retirement Standard March quarter 2014


General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.