With our compulsory super contributions happening in the background, many of us may not give much thought into placing extra dollars into our savings accounts for retirement. In fact, only 22 percent of single people are on track to achieve a comfortable level of retirement income, according to a Melbourne Institute study ‘Measuring Adequacy of Retirement Savings’.
But news from the 2014 federal budget might actually force you to consider planning for retirement a lot sooner, and make you change the way you treat that savings account. By familiarising yourself with the budget and its various provisions, you can better plan for your financial future.
Retirement age rising
Perhaps the most notable part of the recent budget is that it raises the pension age from the current 65 years to 70 by July 1 2035. This builds on the previous government’s initiative to raise the pension age to 67 by July 1 2023, although neither of these plans will affect those born before July 1 1958.
Once this change is in action, you won’t be able to access your pension until that age – meaning you might have to find alternative funds to fuel your lifestyle if you choose to retire early.
But a higher retirement age also means being prepared to work for a longer period of your life than you may have expected. This highlights the importance of careful saving – and the need to have a savings fund you can draw on in case of illness or injury later in life that may limit your ability to work. So it may be a good idea to get that savings account calculator out now and crunch the numbers.
The issue of older workers and a higher pension age was highlighted by the Association of Superannuation Funds of Australia CEO Pauline Vamos.
“Importantly, the health status of older workers needs to be taken into account as many people reaching their late 60s and early 70s are either unable to work at all, or can no longer perform the roles they have been working in, due to physical or mental health-related concerns,” she said in a statement.
This once more underlines for seniors and future seniors the need to plan and to save carefully. Whether it’s jet-setting abroad, staying at home to babysit the grandkids or settling into a quiet home, it may be wise to plan to have too much in the bank than too little.
Changes coming to Australian seniors
On top of pension changes, recent data from the Australian Bureau of Statistics shows that Australians are living longer than ever. A male born between 2010 and 2012 is forecast to live to 79.9 years on average, while a female born in the same period is predicted to live to 84.3 years.
With a longer life expectancy comes a longer retirement period. This means that, both current and future seniors will need to consider prudent financial planning to ensure they have a comfortable retirement.