Why you need $2 million for your retirement
Monday, April 20, 2015/
Small-to-medium business owners should look to have around $2 million in savings for their retirement, says Pitcher Partners superannuation director Brad Twentyman.
His comments follow the publication of an opinion article this morning by Jeremy Cooper, chairman of retirement income at Challenger, in The Australian Financial Review, which says $1 million is a “fair price” for an age pension but would not lead to “comfortable” retirement.
Twentyman says he agrees with this assessment and says people should look to create a capital base of two million dollars for their retirement, leading to an annual income of around $55,000 a year.
“We would be telling business owners to make their deductible contributions each year, but that’s subject to cash flow,” Twentyman told SmartCompany.
Part of the issue has to do with bond rates across the world declining rapidly in response to central banks engaging in expansionary monetary policy.
“People on fixed interest rates (are) struggling to get return rates equal to inflation (once in retirement),” he says.
“It’s a reasonably complex area.”
People who manage their own super funds are richer, healthier and live longer than those without, according to self-managed super funds service provider Accurium.
Accurium chief executive Tracy Williams said in a statement “SMSF trustees need to be aware that many will live beyond the Australian average and ensure they have a retirement plan that could sustain them for 35 years”.
“A healthy 65-year-old SMSF couple wanting a high probability of not running out of money in retirement should use a planning horizon of age 100.”
The debate comes with the 2015 federal budget due to be handed down next month, with Assistant Treasurer Josh Frydenberg telling Fairfax the government’s “razor gang” would not make any changes to superannuation before a broader review of super by the 2016 federal election.
“There’s always a lot of talk this time of year about making contributions above the minimum super guarantee”, Twentyman says.
Feel the churn: How to bounce back after losing staff and clients Sue Parker DARE Group founder
“Motivation is a feeling, commitment is a mindset”: Why you should start investing in yourself right now Lisa Stephenson Who Am I Projects founder
How to call your team into action with a winning presentation Emma Bannister Presentation Studio founder
The link between diet and mental health — and how to eat your way to wellbeing Kate Save Be Fit Food co-founder
From interactive videos to AI: The five marketing trends that will dominate 2019 Warwick Boulter Collaboro co-founder
Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients? Jodie Baker Xakia founder
Why a video news release needs to be part of your PR strategy Leisa Goddard Adoni Media managing director
Want to catch more customers? Here's how to create a super sales funnel Jovana Vujnic Bumper Leads founder