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How long will you live in retirement?

Written on the 6 October 2011 by James Cagney

You urgently need to re-think the financial model your grandparents and parents followed because it simply does not work in the economic and social climate we live in today!

The mistake more than 80% of Australians make is assuming that the mortgage they took out and will eventually pay off, after years of hard work and sacrifice, is the biggest debt they would have in life. The biggest debt you will ever incur is in fact, your “retirement debt”. With medical technology being what it is today, you are going to have to plan to have enough money to survive for 20 to 30 years after retirement. Our grandparents had a different model. They worked until 65 years old, got the gold watch and politely died within three to five years into retirement. With medical science In the 1980’s and 1990's people lived into their late seventies and eighties. In the last 40 years medical science has increased our longevity by 40% . Our children will live into their late nineties and many well live to be over 100 years old - and they will be in better medical shape than we are at 60, through stem-cell technology and other medical breakthroughs.

Imagine growing brand new organs in our own body that take over when the old ones deteriorate. This technology is around the corner so don’t think for one moment that it will not happen in your lifetime. Medical science will improve the quality of life that the elderly have. But here is the catch - it will be expensive and unavailable in the public health system. So you had better have a lot of money if you want to have quality of life in your old age otherwise old age will be unpleasant for you.

Last year the first of the “baby boomers” retired. That is, those born in 1945 and there were 198 000 of them. This will escalate to 300 000 per year over the next few years and effectively add 3 million pensioners to the 2 million we already have in the next 10 years. That is 5 million pensioners and 96% of them will need a hand-out from the government. Add this number to the number of people on Social Security and we will have over 8 million people needing support from the government. In Australia we only have 22.5 million people with approximately 12 million in the workforce - supporting 5 million on Social Security. So who is going to pay for all these people needing social security and pensions in the future? Hard working Australians - that’s who (through increased income tax).

Today more and more Australian believe that they will just have to continue working until the day they die. Well that is not going to happen either. Over a third of retirees today have had to retire because of health reasons – so you might not have the choice. You certainly do not want to live on the current pension of $350 per week, which is approximately 25% of the live-able wage in Australia today. Our grandparents in the 1950’s were able to cope because in their day the pension was legislated at 80% of the live able wage. The government could afford to pay this because there were not many on the pension in those days because they passed away at 67 to 72 years of age. This is very different to the scenarios today with the increasing number of pensioners living longer and longer. So who is going to pay for the 25 to 30 years these retirees live on the pension and who is going to wear their medical expenses? Hard working Australians - that’s who (through increased income tax)

Think about it - how much income tax are Australians prepared to pay before they throw in the towel and either go on the Social Security themselves because it’s not worth their time and effort working every day? High earners will seek tax havens in other parts of the world to work and hide their money where the ATO can’t get their hands on it! That is more and more pressure on Social Security with less and less people working onshore. So who is going to pay for all these people needing social security and pensions in the future? Hard working Australians - that’s who (through increased income tax).

Well you might have been looking forward to your golden years in retirement but the government will not have the money to sustain you. So what are you doing right now to make sure you have enough money in retirement?

Do not put this problem aside and think: “Well, it’s too far off - I will think about it later.” Do you remember your 21st birthday? Do you remember your wedding day? Calculate how long ago that was - you blinked and the years were gone in the blink of an eye. You only have to blink and before you know it, you will be celebrating your  80th birthday. The elderly will be the first to tell you that the older you get, the faster time flies by. Best take their advice before it’s too late.

Let us help you with your retirement plan before it's too late. We have licensed professionals who use time-proven and sound strategies to assist you to adequately plan for your future. Contact us by clicking >>>> here and we will get back to you without delay because time is of the essence. The longer you procrastinate the harder it becomes because you have to save and invest more and more each year to catch up. Do not say you will do it later because “one of these days is none of these days” - time is not your friend. The later you leave this - the more pressure you put on yourself. DO IT NOW!

For more information on your Superannuation and other articles about planning for your future click >>>here and scroll down to “Articles” and to the latest “Updates”. You need to read these because it's your future we are talking about.

Please note:
The information featured in this article is general in nature and therefore should not be solely relied upon as a solution to your personal situation.Before making any investment, insurance or financial planning decision, you should contact and consult a licensed professional who can advise whether your decision is appropriate to you.

Author: James Cagney
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