10 Sep 3 Common Retirement Myths Holding You Back
For some people, retirement can feel like leaping into an unknown abyss. It’s normal to feel nervous, stressed, or confused about how you’re even supposed to spend your time.
You’re not alone; it’s perfectly valid to feel these things. After years and years working hard with your foot on the accelerator, it can be challenging to shift your mindset from “do” to relax.
But your mindset towards retirement can make an enormous difference. Plus, there are so many misconceptions about retirement that will only hold you back.
MYTH #1: You Need $1 Million for a Comfortable Retirement
TRUTH: No two retirees will have exactly the same circumstances, lifestyle, or goals. This means that no budgets will be the same either. Some retirees may only need half a million while some may need double! It entirely depends on what you want to be doing in your golden years.
Now, we understand this isn’t super helpful for those looking to seriously plan out their retirement budget. However, the ASFA (Association of Superannuation Funds of Australia) provides a good superannuation balance estimation for retirees looking to prepare.
- If you are single, the ASFA estimates you will need $545,000 in your super fund
- If you are a couple, you will need an estimated super balance of $640,000
Of course, the figures are not set in stone; minor shifting upwards and downwards occurs with inflation. Also, these retirement budgets presume that you will receive some support from the Age Pension and also draw down all of your capital.
In summary, the $1 million figure is a myth. But that doesn’t necessarily mean that you won’t need this amount yourself. The best approach is to seek personalised financial advice so you can determine your personal superannuation and retirement goals.
MYTH #2: Property Investment Is the Best Opportunity for Retirees
TRUTH: Many retirees are under the impression they need to invest in property for the best returns.
However, retirees have so many investment opportunities both before and after retirement.
You’re likely going to rely heavily on the drawdown of capital and income from your investments as your savings decrease. While residential property markets generally produce good return on investment (ROI), they’re not necessarily very flexible for retirees if they need to access savings.
A diversified investment approach is always recommended so that you can be protected and confident on your investment returns and accessibility.
An investment strategy for retirement may include:
- Your super fund
- Shares
- Bonds
- A mixture of growth investments and defensive investments
MYTH #3: Retirement Means Paying for Your Aged Care and Health Costs
TRUTH: A lot of people looking into retirement financial planning tend to assume that they need to earmark most of their money for health costs as well as aged care.
This may be why so many people put off planning for their retirement as it’s somewhat boring and not very fun to plan to spend your money on medical bills.
But good retirement planning takes into account so much more – including all the fun things you want to do in retirement.
While it’s common for your healthcare costs to increase as you age, it won’t take up your whole retirement budget. Plus, there is Medicare to rely on as well as other government support for concessions.
At Leo Wealth, we take a goals-focused approach to retirement planning. We help our clients discover what they really want to be doing in retirement – whether that’s travelling, moving to a coastal, holiday town, or babysitting grandkids! Then, we help you create a financial plan to ensure you will be able to live the lifestyle you want.
Overcoming these myths is only the start.
Looking for retirement plan companies on the Central Coast?
If you want to start your retirement plan today, reach out to Leo Wealth.
We’re a financial planning practice on the Central Coast helping people just like you plan for the perfect retirement. Book your complimentary appointment today.