Baby boomers were the last generation to be told to provide for their families and there would be an Age Pension to support them for the last few years of their life.
The elephant in the room that no-one spoke about for a long time however was our aging demographic and our ever expanding Life Expectancy.
You see in 1960 a 65 year old woman had a life expectancy of 15.7 years, by 2005 that had blown out to 21.5 years.
It might not seem like much but those increases will mean that future governments are going to find it harder and harder to both fund Age Pensions from a diminishing tax base but also they’ll need to pay them out longer.
And with Life Expectancies getting longer and longer, there’s an increasing likelihood of families having multiple generations on Centre-link benefits at the same time. So, even your children may be unable to help you.
I’m not just talking about the people that you see on the current affairs shows of an evening but people who have been hard working all their life only to find they underestimated how much income they would need in retirement.
The government has already received advice that the Age pension entry age needs to be lifted to age 75. I don’t envy the government that enforces that for they surely won’t survive the next election.
So what can you do to avoid joining the ‘Tea and Toast’ brigade? The title given to pensioners whose diet extends no further than the name suggests as a result of insufficient funding.
Superannuation – A recent study by the Australian Womens Chamber of Commerce found that 53% of self employed women don’t contribute to Super and only 22% do so regularly.
This is an area where, as Grandma used to say ‘Every bit helps’ especially if you wait until after age 60 to draw your income, as it’s tax free. So even, an extra $10,000 in Super is better than the same amount in a bank account which is fully assessed at tax time.
Debts – While everyone has been talking about the effect on degraded investment markets over the last few years, the single biggest impact I’ve been seeing for pre-retirees is existing debt.
Have a good hard look at your existing debt structures and question their validity. Are there strategies you can use to reduce your debts that might not have been available to you 5 or 10 years ago.
Every dollar of debt you can wipe out now could be the difference in the quality of life and health you have after retirement.
Spending – I’m not one of those people that will tell you to start a strict budget and stick to it but if you don’t know where your money is going each month then you’re going to be in a world of pain in the future.
Start questioning your purchases. Look at the item in your hand, does it have a resale value? If it doesn’t then question whether you really need it.
No, you don’t have to live a life devoid of beautiful things but you might want to check in with yourself and make sure you don’t just have a spending problem.
Keep Working – This really is the simplest answer of all though as the longer you work then the longer you have to build savings.
Many people have complained to me in the past about not wanting to work past Age Pension age and they broadly fit into a few categories.
1) I’ve been working this long and the Age Pension is my right. To those I say: Only if you’re happy with the lifestyle that provides.
2) My aging body won’t allow me to continue in my career. There are a number of answers for this, starting with aggressively cut your spending now so you can save more for the future and become accustomed to a reduced lifestyle.
3) Change careers. This could be an option also for people that fit number 2 above. Technology these days, now allows us to study, learn new skills and share those skills with multitudes of people across a number of platforms. Perhaps you’ve had a lifetime hobby that can now be turned into a cashcow for you.
The short answer to all of this is that there are many answers to the retirement question and staring blankly at the wall isn’t one of them. If you need help, then please get some help.
The journey to retirement can be a hectic breathless sprint or you can stroll across the line knowing you’ve done everything you can to set yourself up for your twilight years.