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Why is it that of any 100 people aged 25 now, by the time they get to age 65, 1 will be rich, 4 will be independently wealthy 5 will be working still, 27 will be dead, 63 will be broke (source: ABS 1992 Census).
Why is it that of any 100 people aged 25 now, by the time they get to age 65, 1 will be rich, 4 will be independently wealthy 5 will be working still, 27 will be dead, 63 will be broke (source: ABS 1992 Census). Being preoccupied with everyday life we do not think enough about the future. If you examine those who are financially successful you will find that they are great planners. These people did not expect to get lucky - they knew that wealth would only come through planning. Superannuation should form a major part of your retirement planning – your ‘super’ may one day be the greatest part of your savings for retirement. But how do you know how much money would you need right now in order to lead the kind of lifestyle that you want to lead for the rest of your life? Hands up all those who want to rely on the age pension in retirement. Of course you don’t – so that means you need to fund your own retirement. It doesn’t seem fair after paying taxes all your working life – but it is necessary for financial independence. More people are now starting their working life later, retiring earlier and living longer – it all adds up to a shorter working life and much longer retirement. How do you achieve financial independence? It’s dependant on a number of factors – your life expectancy, saving levels, income, financial situation and retirement goals. These factors can be addressed through just three steps: 1 Estimate the annual income you need in retirement (in today’s terms) These are only three steps but they are not easy and can usually only be achieved via consistent saving across your working life. It’s never too late to start but the earlier the better. Long-term compound returns over, say, 20 years can be huge, so it is critical to start as early as possible. While tax structures and actual investment options impact considerably on any outcome, the decisive element is disciplined and sustained saving. Even a small amount up front, added to regularly, can make a major difference later in life. Retirement is a destination. And as with any destination, you must undertake a journey: a journey that requires careful and committed design. So, to get the most from this destination (and remember you might be there for 30 years or longer), start planning as soon as you can. Because there's nothing retiring about your retirement. If you require any further information or assistance, please contact Peter, at CMA Financial Solutions.
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