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When the term, ‘independence’ is mentioned, what does it mean to you? Being able to retire from your job? Making all of your own decisions? Research carried out by ANZ on the topic of independence revealed a few interesting – and also concerning – responses.
Just over 70% of Australians surveyed earlier this year stated that they feel independent in their everyday lives. This was defined as being safe, secure and happy, while also being responsible for everything happening in their lives because they were able to take care of themselves financially.
What Type of Role do Finances Play in a Person’s Independence?
- Approximately one-third of people surveyed define independence as financial freedom
- 19% stated that it meant not being in any debt
- 29% of people surveyed mentioned that they defined independence as having enough money to enjoy their lives
- 38% of respondents noted that their super was their main asset in their future plans to lead a completely independent life
Boosting Financial Independence
Most Australians are thinking about how much money they will need during their retirement years, with 90% confirming that they have planned for this. Superannuation is a crucial part of a money-saving strategy – in fact, for 20% of people; it is their only savings method. However, many Australians plan to continue working so they can develop additional savings that will provide them with the level of independence they require.
Although super plays a crucial role in financial independence, one out of eight Australians was either not aware of what it was or what purpose it served. 15% of survey respondents didn’t know how much super they had accumulated, while many people vastly underestimated how much money they would need to enjoy their retirement years.
The lack of engagement is especially concerning for women because a large divide still exists between men and women where super balances are concerned. A recent Household, Income and Labour Dynamics survey revealed that men still have close to double the superannuation that women have, with the mean balance in December 2015 being $454,221 for men and a mere $230,907 for women.
Comparing Expectations to Reality
Just over 70% of people who agree that their super is their main asset have expressed concern regarding whether they will have enough money to retire with. Women are not only much more likely to be concerned than men; it was revealed that they were also more likely to know how much they would need to retire. While 38% of respondents were under the impression that they would be able to live comfortably on a super balance of less than $300,000, a staggering 31% of respondents aged between 18 and 34 believed that they would be able to retire with a super fund of less than $100,000.
How Much is Needed to Retire Comfortably?
Below are a few recommendations with regards to how much you could need to retire comfortably:
- A conservative retirement income for a single person is $24,250 per year. This will enable you to still enjoy a few basic activities from time to time.
- A comfortable annual retirement income is around $43,665. This will allow you to enjoy a good living standard and be involved in a broader range of activities
- If you aren’t a property owner, you will most likely need more than $1 million to retire
Do you want to understand & control how comfortable your retirement will be? If so call us today on 03 9848 5933.