In a survey of approximately 7,000 people, 44% of respondents indicated they feel prepared for retirement, with the figure down from 49% in 2015.
This means that 51% of those people feel that they will outlive their retirement savings. These are alarming figures and how our goal is to ensure that we make more people comfortable for retirement.
As inflation continues to rise at a rapid rate, the cost of living continues to climb. The average couple need $50,000 per year to live and $80,000 if you would like a comfortable retirement. However, these figures will be $82,000 & $131,000 respectively in 20 years time.
If you’re retiring earlier you better get a move on!
This means that you will need between $1,800,000 & $3,000,000 in income producing assets to live the comfortable retirement you deserve. Financial independence is a tricky thing to master but here at the Financial Collective we aim to provide clients with the strategies and knowledge to excel in this area of their lives.
Leaving retirement planning too late forces you to take higher risks because you're trying to make up the returns in the shortest time-frame possible. Therefore, the earlier you start, the less stress it is on yourself and the less risk you need to take.
Think of it like this... You have one hour to get to a meeting across town which is approximately 60 kilometres, this means you can travel at 60km/h to get there in time. However, if you leave yourself 30 minutes to get there you have to travel at 120km/h, driving at this pace is very risky and could cause you to get into a crash and never make it to your meeting at all.
This is how we look at investing for retirement. The less time you leave your investments to compound the more risk you will have to take to make up for the time you've lost.
Compound interest is our greatest chance of financial success.
Take someone who invests eight years till he's 27 and invests a total of $28,800, or $300 a month, and then just leaves it there—doesn't add another penny. He'll have nearly 2 million when he retires at 65 if the market continues to compound like it has (at 10 percent or more annually on average).
If his buddy doesn't start till he's 28 and he invests $300 a month, he'll have invested $140,000 by the time he retires at 65. But his compounding returns will end up at almost $300,000 less than his friend.
That’s nearly 7 times more invested and 15% less leftover for the friend that started when he was 28.
A quick story to highlight the power of compounding! Get started now before it's too late.
We understand everyone is busy in their everyday lives and can’t seem to find the time to get their heads around these unbelievably obscene figures, but its the truth and it’s something we need to put some serious time and thought into.
However, lucky for you. We’re here to help.
At the Financial Collective, we have a team of financial advisers, accountants and mortgage brokers which can all be used to help you reach your personal and retirement goals.
We take the stress off of you and your loved ones, by guiding you in the right direction, we are certain that we can build you the wealth you will need for your retirement.
Still not convinced?
Give us a call for a free 1 hour discovery session to discuss anything you like and find out for yourself!