People approaching retirement often worry that they do not have enough finances to live comfortably.
This anxiety is exacerbated by the conflicting numbers in the media regarding the amount needed. On Weekdays Elson Goh, from EG Financial Services, joined Mike to discuss how we can obtain the assurance that we can be ready for retirement.
Elson said there are two basics schools of thought to determine the amount needed for retirement. The first train of thought is determined by the Superannuation Fund Association. As a single you need $545 000 and as couple $640 000 to retire comfortably. This equals a $62 000 yearly income that you can live on. “This relies heavily on the government age pension, you own a house and you live to age 85 life expectancy.” The second school of thought allows for travelling and pursuit of hobbies which equals $1.3 to 1.5 million. “They are all not wrong. But they look at it from different angles and that is where the confusion is comes from. The problem is we are trying to find one number to fit everyone.”
Wrong questions produce wrong results
Elson also shared some advice he had given to a previous client who lived in a nursing home. “I looked at her situation and all her financial dependents and next of kin. I said to her I challenge you to spend your money.” Although this may seem like strange financial advice. Elson makes a good point by showing that each person is different and you shouldn’t have anxiety to hoard as much money for retirement. “The next day the nurse said she had never seen her happier. A few years later she died and she didn’t even make a dent in her bank account. That shows that everyone is different!”
What are the right questions?
He also shared 3 questions that people who are approaching retirement should think about.
- What am I going to do? – The same way you would plan your career, plan what you want to do in your retirement. This may include travelling, pursuit of hobbies or volunteering. Having a plan will help establish how much you need
- What support do I have? – For example family support may mean you need to sell your home and move closer to relatives who can take care of you. “Consider this as early and you can don’t want to wait until the last moment.”
- How long do I want to work? – This is the most important factor to determine the amount for retirement. “I’m not talking about working full time. I’m talking about easing into retirement and consider how long you can remain productive.”
If you are approaching retirement and felt confused or anxious, hopefully Elson Goh’s advice has helped ease you mind. Check out the full chat in the video below.