Living longer means most Australians won’t have enough money in retirement

How much do you need to retire comfortably?

How many properties do you need to retire in the lifestyle you desire or how much superannuation do you need?

Well.. you may not have enough according to a report by Mercer, which finds that 54 per cent of Australians expect to have less money than they need for the lifestyle they desire in retirement.

It’s because we’re living longer  

They suggest that more than half of Australians expect to have less money than they need for the lifestyle they desire in retirement because they are living longer.

Retiring comfortably is increasingly looking like a distant dream for most Australians with nearly half of the country’s population expected to outlive their savings.

In fact nearly 10 per cent of the population may be forced to rely only on the age pension for 15 years or more.

Key findings:

• 1 in 4 Australians will outlive their retirement savings by more than 10 years.
• 54 per cent of Australians expect to have less money than they need for the lifestyle they desire in retirement
• On average, people expect to have half the amount they need to retire comfortably, falling short by almost $500k

More details: 

On an average, people expect to have half the amount they need to retire comfortably, falling short by almost $500,000.

Mercer says that Australia is facing “a very real” economic and social dilemma due to a lack of protection against longevity risk up until now.

Mercer’s Managing Director and Pacific Market Leader, David Anderson made the following comments on the report:

“Longevity risk is a huge threat to Australians’ quality of life and healthcare in retirement, but until now we’ve had very few cost effective options to ensure our super lasts for as long as we do, which has put pressure on the public purse and our own hip pockets.

The research shows that as well as the pre-retirement group, retirees are also likely to outlive their savings by more than five years on average, and one in four retirees will outlive their savings by 11 years.

Nearly 10 per cent of the population will live even longer and may be forced to rely only on the age pension for 15 years or more.

Retirement will be a financial challenge for a lot of people.

Life might be simple but comfortable for the first decade or so, but once savings run out the Age Pension will only provide about half the amount required for a comfortable lifestyle, what happens when medical expenses increase or aged care is required?”

So how many properties do you need to retire comfortably?

Have you wondered how many investment properties you would need for financial freedom?

I’ve found that while most property investors hope to one day replace their personal exertion income with cash from their investment properties, most don’t have a strategy to achieve their goal.

Well…it depends.

O.K. that’s probably not what you wanted to hear, but in fact it’s a bad question.

It doesn’t really matter how many properties you own.

What is more important is the value of your asset base and how hard your money works for you.

I’ve explained my thoughts on how many properties does it take to enable you to quit your day job and live comfortably in a blog here.