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Do You Fear Running Out Of Money In Retirement?

Do You Fear Running Out Of Money In Retirement?

The Australian Bureau of Statistics conducted, in July 2016 to June 2017 and it provides some interesting insights around retirement expectations, planning and financing.

The 2016–17 Multipurpose Household Survey (MPHS) shows that “there were 3.6 million persons, aged 45 years and over, who reported that they were retired from the labour force. This group comprised 1.7 million men and 1.9 million women. Just over half of all retired persons were aged 70 years and over (56% of retired men and 52% of retired women).

That’s a lot of people who need to fund their ever-lengthening retirement. Who may well be facing the fear of running out of money in their retirement.

What are the Statistics?

And, of the 9 million persons in the labour force who indicated that they intended to retire from the labour force:

  • 6 million persons (40%) did not know the age at which they would retire (36% of men and 44% of women). Of those who did indicate an age
  • 20% intended to retire 70 years and older (22% of men and 18% of women)
  • 50% intended to retire between 65 and 69 years (53% of men and 47% of women)
  • 23% intended to retire between 60 and 64 years (19% of men and 27% of women) and
  • 7% intended to retire between 45 and 59 years (6% of men and 8% of women).

The average age at which persons intended to retire was 65 years (65.5 years for men and 64.4 years for women).

Financial security was the most often-stated main factor influencing their decisions as to when they would actually retire were.

The latest figures from the Australian Institute for Health & Welfare (AIHW) suggest that the average Australian life expectancy is 82.5 years for non-indigenous men and women and an average of 10 years less for their indigenous counterparts. So that is a good chunk of time that needs to be planned for and financed so that these people do not run out of money in their retirement.

A few reasons that you may run out of money in your retirement include:

1. Not saving enough

Do you set aside about 15% of our income each month for the future? Every month?

So will you have 10 times your ending salary tucked away when you finally retire?

Countless numbers of Australia’s older workers today are nowhere close to that goal. Where are you? How much time do you have left to ready yourself for retirement?

2. Underestimating your expenses

Many pre-retirees expect that their living expenses will go down once they retire.  Certain expenses, like commuting and corporate wardrobes, might go away. But most bills, like housing, electricity, phone service, medical expenses and food will stay the same or even rise!

Don’t make the mistake of assuming that your expenses will automatically shrink. If you do, you could well deplete your life savings far too quickly and be left struggling as you live out the remainder of your years.

3. Relying too much on Government assistance

How much of your income do you expect will be provided by the Age Pension? One person in three depends on the Age Pension to provide 90% or more of their retirement income.

Age Pension may replace around 40% of the average worker’s pre-retirement income, but most seniors require a lot more than that to keep up with their bills and lifestyle.

If you’re assuming you’ll mostly get by on assistance provided by the Australian government and you won’t need any savings, you’re probably mistaken. You may well need to start now to do a few things now in order to not run out of money in retirement.

According to the Australian Government of Human Services, age Pension rates per fortnight are:

Single                             $  834.40
Couple Each                 $  629.00
Couple Combined      $1,258.00

So, how much will Australians like you need to retire?

According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, single people will need $545,000 in retirement savings, and couples will need $640,000.

According to Moneysmart, ASIC, the following table estimates the amount of yearly and weekly costs you can expect for both modest and comfortable incomes.

So, will you run out of money when you retire?

This all depends on a number of factors. What kind of lifestyle you want for yourself and how much you’ve saved to bankroll it for you, how old you are now, how long you live, and whether or not you are prepared to work during retirement.

If the latter is an avenue you wish to pursue, then 4Retirees can help. 

In our community we are matching you with job opportunities for retirees.

Simply complete the free flexible jobs match and get your personalised list of flexible money-making opportunities you can carry with you into retirement!

The earning opportunities available to you depend on your skills, interests and current circumstances.

You don’t want to see yourself running out of money in retirement and neither do we!

We can’t wait to hear all about your situation.

Share your story!

The 4Retirees Team

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