The magic number for retirement

27 February 2020

Josh Burgess, Associate Wealth Adviser, Private Wealth Advisers |

Wealth Advisers are often asked, ‘How much money do I need for a comfortable lifestyle in retirement?’ Clients are often looking for a magic number, and the answer to this question will ultimately boil down to the spending habits and behaviours formed during your working years.

Many think you will need the same amount of income, indexed to inflation, throughout your post-work years. The reality is that spending declines as we age, and we need less than we might think to have a rewarding retirement. You do not have to give up the lifestyle you have grown accustomed to and the level of spending on goods, service and entertainment you are comfortable with as you approach your post-work life. It is important to make the most of life while you are young and fit enough to do so.

Also, the common fears we often hear as our clients approach retirement are related to medical costs, longer life expectancies and increased daily expenses. This uncertainty surrounding your financial stability in retirement can lead to sleepless nights as well as forgoing experiences before and after retirement due to fear of running out of money.

It is never too late to implement a long-term strategy for your wealth and begin removing the financial stress associated with retirement. By beginning an effective wealth creation strategy, you can relax knowing that expenses associated with ageing, including medical care, do not have to be as daunting with the right plan in place.

It is also important to remember that your long-term investments, such as superannuation, will keep working for you during retirement. This means that you can start ticking items off your bucket list and enjoy your golden years as best as you can.

At BDO, we believe that you should enjoy your money while you are young and healthy and trust that the hard work in your early years will set you up for a successful and fulfilling retirement. By having a realistic strategy in place, you know where you are going, and how you are going to get there.

If you would like to understand what actions you can take today that will have a beneficial impact in years to come, get in touch with a Private Wealth adviser.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances. BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

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