Latest Financial Planning News
Hot Issues
SMSFs attract younger members
Heed restrictions on downsizer contributions
Access to more resources and tools than most websites.
Valuations key to avoiding NALI restrictions
SMSF advice appetite strong, says ASIC
For a smoother path to investment success, diversify
How's Australia doing statistically?
LRBA changes mostly affect Melbourne, Sydney retirees
Lessons from the 2019 Index Chart
The global economy at midyear: How our views have changed
The biggest global corporations since 1998
‘Retrospective’ LRBA measures tipped to cause headaches
Downsizer Super Contribution
Keep track of how Australia is really ticking over.
Insights from the 2019 Vanguard / Investment Trends SMSF survey
What falling interest rates mean for investors
ATO releases ‘welcome guidance’ on death benefit income streams
Super growth reducing age pension drawdown
Big four firm outlines new financial year checklist for SMSFs
Asset allocation as you age
Australia - the story goes on.
Consolidate your super and save
Critical documentation steps flagged with switching SMSF loans
Good investment habits versus damaging biases
Control considerations flagged with death benefit pensions for children
Interest rate for SMSF loans set to rise under safe harbour terms
Recession on our mind
What it will take to close the super gap between men and women
Australia - How are we going as 2018-19 ends?
Articles archive
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 4 of 2014
A great overview of investing and good Holiday reading.
The final nail in the coffin for LRBAs?
Market Update – November 2014
Online financial tools your family and friends can use.
Overcoming our behavioural barriers to saving
‘Unintended consequences’ threaten SMSF tax reform
Retirement income: every bit counts
ASFA continues to sound warnings on retirement savings
Market Update - October 2014
The little-known rule with huge implications for self-managed super funds
Grappling with the uncertainties of retirement
Change to ATO decision relevant to SMSF in-house assets
Taking a personal perspective on the global super challenge
Some terms defined - Super & Investment
The perils of market-timing and over-confidence
Market Update – 30th September 2014
Hardly a do-it-yourself job
Super insurance: wide coverage, limited understanding
ASIC eyes SMSF loan sign-off
Redesigning retirement incomes policy - from the ground up
Grappling with the uncertainties of retirement

A central challenge when saving for retirement is to grapple with ...

 ... the uncertainties about how your needs may change after eventually leaving the workforce.




First, there is life expectancy. It makes much sense to save for a long retirement, particularly given that life expectancies are markedly rising.

But, of course, half of us will outlive our average life expectancy, half of us won't.

Second, spending patterns typically change as retirees grow older, becoming less active and frailer as the years go on. However, spending patterns can significantly vary between retirees even with similar levels of retirement savings. Much depends on personal circumstances including health.

Ross Clare, director of research for the Association of Super Funds of Australia (ASFA), writes in the October issue of the association's magazine Superfunds about the challenges when planning for retirement given increasing longevity and varying spending habits.

Clare's article is largely based on his recent research paper Spending of Older Retirees, to be published on ASFA'S website.

"While no two individuals will have identical expenditure patterns," he writes, "governments, policymakers and individuals need to have a standard measure of expenditure in retirement on which to base their decisions."

The current quarterly ASFA Retirement Standard estimates what it would cost 70-year-old retirees to have "modest" and "comfortable" standards of living. (The calculations are based on the assumption that the retirees own their home.)

Obviously, the matter of what constitutes a "modest" and "comfortable" living standard is, of course, highly debatable with much depending upon personal circumstances and expectations.

In recognition of the longer life expectancies of Australians, Clare's research contrasts the estimated cost of financing these standards of livings for 90-year-olds against those of 70-year-olds.

A "comfortable" standard of living is estimated to cost a 70-year-old single person $42,433 a year ($37,665 for a 90-year-old) and $58,128 for a 70-year-old couple ($52,866 for a 90-year-old couple).
By contrast, it is calculated that a "modest" standard of living would cost a single 70-year-old retiree $23,363 a year ($22,529 for a 90-year-old) and $33,664 a year for a 70-year-old couple ($33,604 for a 90-year-old couple).

Older retirees tend typically spend more on assistance in their homes such as cleaning services and on medical care while spending less on transport and entertainment.

Retirement tends to be used as an all-encompassing description of the period spent after a person leaves the workforce. In reality, retirement is much more complex with many shades of grey.

By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
09 October 2014



Investorplan is an Authorised Representative of GWM Adviser Services Limited trading as MLC Financial Planning | ABN 28 056 426 932 | an Australian Financial Services Licensee with its Registered Office at 105-153 Miller Street North Sydney NSW 2060
General Advice Warning | Terms & Conditions | Legal Statement | Privacy Policy |Site by PlannerWeb