For most people, their lifestyle at retirement depends on the outcome of their super. We work and have employee contributions and personal contributions to build this nest egg. But do we ever sit and think about what more we could be doing?
According to the Association of Superannuation Funds of Australia (AFSA), a single person in Australia would need around $595,000 and a couple would need around $690,000 in retirement saving to support a comfortable retirement. (March 2023, AFSA, https://www.superannuation.asn.au/resources/retirement-standard). Comfortable of course is dependent on the individual and their lifestyle expectations.
However, based on the superannuation balances for men and women (aged 15 and over), the Australian Bureau of Statistics (ABS) from 2019-2020, the median superannuation balances are way below this at $114,600 for men and $68,000 for women, suggesting many Australians may not have enough to support a comfortable retirement.
What do these figures mean?
If we assume that someone retires at the age of 65 and plans to live until the average life expectancy, a single person with a balance of $114,600 would have an annual income of appoximatey $6,000 per year (assuming a 5% return on investment). A couple with a balance of $137,000 ($68,000 x 2) would have an annual income of approximately $7,100 per year. However, this is assuming the retiree has no other sources of income which is unlikely.
To achieve a comfortable retirement income, a retiree would need to have a higher superannuation balance or other sources of retirement income, such as the Age Pension or other investments.
A property investment option
Property Investment has long been used as a stable strategy to build wealth over the long term. Traditionally, Property investments have been undertaken by using the equity built up in the family home. However, there is now the option to use Self-Managed Superfund (SMSF) to purchase property as investments to grow your superannuation.
And the best thing, as a separate entity, property investments through your SMSF may not actually affect your lifestyle – as it funds itself through your super contributions and property rental income.
While there are pros and cons for every investment option, getting started with SMSF Property Investments may not be as hard as you think.
The information contained herein is general information only and is not to be interpreted as investment, legal and/or financial advice. Any information provided is for general information only and has been prepared without considering any personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information, having regard to your own objectives, financial situation and needs – we also recommend that you seek advice from appropriate professional advisors, such as (but not limited to) legal, financial, accounting and taxation.