Millennials in Australia are facing an unprecedented challenge when it comes to planning for retirement. Many will never fully retire, as they will be unable to accumulate the necessary funds to support themselves for an extended period of time. With the cost of living steadily increasing, and many millennials grappling with large debts and limited financial resources, it is likely that more people will have to work well into their golden years.
How much is needed for a comfortable retirement?
According to the Association of Superannuation Funds of Australia (ASFA), an individual requires approximately $48,266 per year for a comfortable retirement. This amount increases to $68,014 per year for couples. However, the average superannuation balance for a 30 year old millennial is currently just $38,386, which is well below what is required for a comfortable retirement. As a result, many people in this age group are unlikely to hit their retirement targets.
Why may this concept happen?
There are several reasons why many millennials in Australia may never fully retire. Firstly, many are facing significant debts, such as student loans and mortgages, which can make it difficult to save for retirement. The cost of living is also steadily increasing, which means that people have less disposable income to put towards their retirement savings.
Additionally, Australians are living longer than ever before, which means that people will need to support themselves for longer periods of time. While this is great news for those who are healthy and active in their later years, it can pose a challenge for those who have not saved enough to support themselves for an extended period of time.
Working through your older years may be easier
One way that millennials may be able to support themselves in their later years is by continuing to work. Fortunately, technological advancements have made it easier than ever to work remotely or from home. This means that people can continue to earn an income even if they are not able to work full-time or travel to a physical workplace.
Many people may choose to slow down rather than fully retire, which means that they may continue to work on a part-time or casual basis. This can provide additional income to supplement their superannuation savings and help them to achieve a more comfortable retirement.
High expectations of life experiences and material goods
Another reason why many millennials may never fully retire is that they have high expectations when it comes to life experiences and material goods. Many people in this age group place a high value on travel, dining out, and other experiences that can be expensive. Additionally, people may be accustomed to a certain standard of living, which can be difficult to maintain on a limited retirement income.
What retirement lifestyle do you want to live?
If you are a millennial who is concerned about your retirement prospects, it is important to take action now. Start by considering what kind of retirement lifestyle you want to live. Do you want to travel the world and enjoy all that life has to offer, or are you happy with a more modest lifestyle?
Once you have a clear idea of what you want to achieve, you can work with a financial planner to develop a plan to get there. This might involve making additional contributions to your superannuation fund, investing in property or shares, or taking other steps to increase your wealth and financial security.
While a fully retired life may not be achievable for many, with careful planning and diligent financial management, millennials can still enjoy a fulfilling and comfortable retirement.