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The Retirement Enigma

Preparing for retirement is one hot topic when it comes to an individual’s personal finances. Rather than being hard to come by, coverage of stories and think pieces telling us how much we will need to save for retirement, how underprepared we are for retirement and the like are an almost daily offering in many media personal finance pages.

The much quoted figure, if you want to believe it, is that you need a $1M or more to draw on once you have retired. Australian’s have the 4th largest amount of super savings in the world, over 2.2 Trillion dollars – yet many question whether this is enough for our current population to retire on, particularly with high levels of personal debt carried by so many.

It’s Up To The Individual

While these broad overall numbers make great headlines, we say that the amount a person “needs” to retire on will depend overwhelmingly on that individuals needs and desires – and how they want to live in retirement. You may need much more than a million if you plan on spending 6 months of the year on 5-star globetrotting holidays, but if that’s not your thing, you will be able to live comfortably on much less. The AFSA, the superannuation industry body has calculated what they think individuals and couples needs to live in a comfortable retirement with their calculation of the “Retirement Standard”. These types of figures are a good starting point to be able to compare their examples and costings with what an individual might want to, but for the individual, that’s all they’re really good for – the comparative starting point.

The Value of Advice

Financial advice is the art of identifying a your needs, goals and desires, then charting a course in order to attain them. The strategies put in place to get there may be as different as the goals themselves. The key point is a we will be able to help tailor a financial solution for the individual or family based on their needs and desires that will provide markedly better outcomes for you. Retirement advice is no different.

Are Advisers On Target?

Data sourced by Adviser Ratings suggest a resounding yes to both these questions. Taking for granted that most advisers are worth their salt and can effectively help their clients identify and plan to reach their goals, for those seeking financial advice, organising retirement plans is a key concern. Analysis of over 10,000 client reviews indicates that 85% of individuals seek advice on one or more aspects of their retirement. Whether clients are coming to advisers asking for particular retirement advice, or the advisers are steering their clients toward retirement planning may be a moot point, but analysis shows that the vast majority of advice clients are receiving advice about planning for their retirement. The four categories that clients have indicated their advisers have helped, that fall into this area (Retirement) are:

  • Building Super

  • Preparing for Retirement

  • Self-Managed Super Funds

  • Estate Planning

Analysing the data further, in particular the advice sought by different age groups, reveals what some may find to be unexpected results. The five age cohorts analysed are those under 35, 36-45, 46-55, 56-65 and 65+.

Data reveals a solid consistency across the age cohorts when it comes to seeking advice in relation to retirement. In fact, “Building Super” is the number one category of advice (of 18 overall categories) that is most sought after across all age cohorts. As Figure 1. illustrates, the percentage of people getting advice on this area in the youngest and oldest cohorts is 62% and 63% respectively. In the three middle cohorts, 66% of people receive advice about building their super.

Fig 1. Percentage of Advice Clients Receiving Advice on Building Superannuation

When all the categories related to planning for retirement are taken into account, again, there is a solid consistency across age cohorts, as shown in Figure 2. Analysis shows that 20-25% of all advice clients get advice about self-managed super funds. Interestingly, less than 4% of advice clients seek advice around “Aged Care”.

Fig 2. Percentage of Advice Clients Receiving Advice Related to Retirement

Given the fact that Australia has a large and growing ageing population, this may indicate this particular area is under-serviced by advisers and further expertise should be committed to this area, to help assist this growing market.

Almost everyone (96%) who sees a financial adviser feels that their adviser explained how their advice would help their individual circumstance and needs. Crucially, this metric is independent of any nominated monetary value. Rather, advisers are helping people plan to satisfy their financial needs based on the individual’s personal goals. This is the real value of advice. Helping determine an individual’s goals and implementing strategies to prioritise and achieve them. You don’t need a million dollars to retire comfortably, you just need a good adviser.

Call us on 1300 861 143 to get you on the right path to planning your retirement today.



This information is current as at 24/01/18 This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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