The holy grail of most people’s wealth-building goal is to achieve financial freedom. Financial freedom, or financial independence, is the status of having a dependable cash flow to pay your living expenses for the rest of your life without having to be employed or dependent on others. Just about everyone wants to achieve financial freedom […]
When you can retire in Australia
You could retire at any time and any age in Australia, as long as you have sufficient income to support your ideal lifestyle.
For most of us, the most efficient way to achieve our retirement income goal is by building investment assets generating enough passive income. And you would need to find out how much net investment asset you need to have that kind of income.
Here is a simple calculator to help you find out how much you need to retire comfortably.
Centrelink and Superannuation may not be even close to “enough”
Here are some interesting figures about retirement in Australia that you might not know:
- You need to pass a series of stringent tests to be eligible for the government age pension after your 67th birthday (for most Australians). The pension is maxed at $1,423.60 pf (the equivalent of $37,013.60 pa) for a non-homeowner couple (Source: Services Australia). – Most people feel that the government age pension is nowhere near enough to fund a “comfortable” lifestyle.
- Average superannuation balances at the time of retirement (assumed to be age 60 to 64) in 2015-16 were $270,710 for men and $157,050 for women (Source: The Association of Superannuation Funds of Australia Limited (ASFA)). If there was no investment movement and assuming you need $60,000 pa to retire comfortably, the superannuation fund balance will become $0 in less than 5 years for men and less than 3 years for women.
- The average life expectancy in Australia has increased by almost 20% during the past 50 years in Australia (Source: WorldBank), so you may have more years to support yourself and your family than the previous generations. The aging population also means taxpayers have to work harder, but might not have the same benefits. This is because the dollars in the age pension “pool” are shrinking.
How to retire comfortably
Is there a better way to do retirement since the government pension doesn’t look so glamourous?
And that is by building investment assets outside of your family home, both inside and outside of your superannuation fund.
You can use this simple, 7-question calculator to work out your ultimate retirement question:
How much is enough?