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Planning for Retirement - A Financial Introduction

Planning for Retirement - A Financial Introduction

When it comes to funding retirement, there can be an overwhelming focus on superannuation. In fact, based on an analysis of ABS data by the Grattan Institute, superannuation only currently accounts for 15% of the wealth held by households. The family home is still the most dominant asset, as illustrated the chart below, with superannuation poised to overtake only if significant growth is maintained over the coming decades.

In addition, there are limits to how much the community can afford superannuation in its current form and there are clear risks to focussing too heavily on super as the "only" wealth vehicle - including the tendency of politicians to "change the rules".

These comments are simply made to reinforce how important it is for individuals to focus on managing and accruing wealth across all the various asset classes. This includes the appropriate management of your family home, one of the most tax effective investments available. While it is not a liquid investment, nor income earning in the absence of renting part of the property or generating funds from a reverse mortgage, it provides very tangible financial security and reduced living costs if fully owned on retirement.

The chart below demonstrates both the importance of property investment across all the age ranges and the apparent failure of policy in Australia to induce individuals to move out of the family home - because of the favourable treatment both in terms of capital gains and the pension assets test - or to derive income from the family home through a reverse mortgage or via the Home Equity Access Scheme. The relatively minor role played by superannuation so far, particularly post retirement is probably largely a function of the fact that most current retirees had relatively little time to build up substantial superannuation funds.

This section of the website provides an introduction to financial planning for retirement, based on strategies you might adopt at various ages, in your thirties, forties, fifties and during retirement. This is an extremely complex area which is very dependent on your own personal circumstances and goals, and our focus has been upon providing an introduction to the major issues involved. Any planning should be done in concert with your individual financial planner and you should play an active and informed role. Trusting your planner does not mean that you should abrogate your responsibilities for understanding and managing the process.

If you would like to arrange professional advice in relation to the above matters, please complete the Inquiry form below providing details and you will be contacted accordingly. You will receive a fee quotation in advance of any advice or services being provided.