Cost of comfy retirement unattainable for many
More than 80 per cent of Gen X and Y Australians may not be able to afford a comfortable retirement, according to research undertaken by Griffith University.
Commissioned by No More Practice Education, it shows that in 26 years’, more than $2.06 million will be needed to achieve the retirement goal.
Based on that figure, 81.3% of people born from 1966 to 1994 are going to fall short. That percentage rises to almost 94% if Australia’s long running inflation rate of 5.07% is used as the figure.
“Whilst these numbers represent our ‘worst case’ scenario analysed, they are a very real possibility we need to be prepared for – this low growth scenario has been the reality for countries like Japan for over 20 years,” said Professor Brimble.
Marcus Field, Managing Director of No More Practice Education, described the figures as a wake up call.
“It’s clear that we must take real ownership for our financial futures and do it now,” he said.
The report also found that over the next two decades $3.5 trillion is likely to be transferred from Baby Boomers to future generations. In fact, 75 per cent of Gen X & Y with surviving parents will inherit more than $110,000.
“110,000 invested well for 25 years could grow to be over $1 million, but it is also the sort of amount that could very easily be frittered on lifestyle. Getting people educated on how to invest that money for the long term is vital to all of our futures,” said Professor Brimble.
The way in which Australia deals with the looming inter-generational wealth transfer is crucial for the country.
While it could result in a financial reckoning, increasing the financial capability of working Australians may lead to a much more positive result: reinvention for the better.
Read the full report Reinvention is the new Retirement at https://www.nomorepractice.com.au/reinvention-is-the-new-retirement-survey/
29 October 2017.