The general attitude towards retirement by people in their twenties and thirties is “I’ll worry about it all later”. According to a recent survey by the Centre for International Finance and Regulation (CIFR), financial planning for their later years is only uppermost in the minds of a very small percentage of young people. However, all young people should consider saving for retirement.
The survey, headed by Professor Ian Ramsay of the University of Melbourne, asked a number of retirement-related questions to a group of 25 – 34-year-olds and concluded that “young adults are unengaged by and uninterested in, superannuation or retirement planning”. This seems to reflect the mindset of the majority of young Australians who are focused on the now, rather than the later.
But putting your financial future on the back burner and relying solely on the pension is unwise, as not only could you end up struggling to support yourself in your retirement years but your parents too. In another 15 years, nearly a quarter of Australia’s population will be aged 60 and over, that’s a lot of people expecting the pension to be a major part of their income. With the Federal Government pushing to lift the retirement age to 70, it also means less choice to retire earlier if you need to because of health reasons or lifestyle preferences.
Young people need to get to grips with the fundamental facts about retirement, the range of investment options available, and devise a plan to create financial independence later in life, say the Australian Financial Planning Association (FPA). To generate a retirement income of around $50,000 per year, which is a little above the annual pension, then you’ll need at least $1 million – something that many young people don’t realize.
Joining a superannuation scheme or setting up a retirement account when you get your very first job is the first step on the road to financial security. Setting savings goals and milestones and being able to manage debt is also essential to becoming financially savvy.
Other key life triggers that need careful consideration and financial advice for maximizing savings and minimizing tax liabilities include: buying a house, getting married, having children, changing jobs, and changing partners. At every stage of life, you need a savings program and to always keep sight of your long-term goals, say the FPA.
You may also find Gabriel Cooper’s article “Reason why young people should quit work retire early” or my article “Millennial Trend to Quit Work Early“
Glenis Phillips SF FIN – Designer of Financial Mappers
Here are some additional articles I have found for you:
- Step-by-step guide to Retirement Planning (My Wealth Solutions)
- How to really engage young people with superannuation (UNSW – Business Think)