With the federal government wanting to lift the retirement age to 70 by 2035, as put forward in its recent, widely criticised budget, it will be interesting to see in what form, if any, this controversial measure manages to make its way through a hostile senate.
According to the Australian Financial Review* , Mr Hockey said he expected Labor to support the change but opposition families spokeswoman Jenny Macklin said it was a broken promise and Labor would not be supporting it.
“The Prime Minister has no mandate to make changes to pensions in this year’s budget – regardless of when these measures commence,’’ she said.
Regardless what happens politically in the coming months, the general impetus to lift the retirement age is a response to the simple fact that on average we are living longer and somehow need to find enough money to last for our ever increasing life spans. One obvious answer is to work for longer, but not everyone’s happy about that.
A key question is, how much money do we need to enjoy a reasonable retirement? That can determine how much longer we need to work for.
The Association of Superannuation Funds of Australia (ASFA)’s ‘Retirement Standard’ ** – which looks at a basket of costs that retirees typically need to meet, shows that in general, a couple looking to achieve a ‘comfortable’ retirement needs to spend $57,817 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $33,509 a year.
As for building up sufficient investment assets – including super, shares, managed funds and investment property, to help generate such incomes, ipac financial planner Paul Clitheroe often quotes a formula that provides a general indication of what sized nest egg you need to retire at different ages – before 70.Clitheroe says, “Here’s a quick calculation you can do to give you the approximate level of accumulated funds you would need to provide certain levels of retirement income. You simply multiply the annual income you would like in retirement by 17 if you want to exit the workforce at age 55, multiply it by 15 if you want to retire at age 60, and multiply it by 13 if your proposed retirement is at age 65”.