A new research study confirms what most Australians will face in the future: the need to work well beyond normal retirement, simply because they have too little savings to see them through.

A survey commissioned by the federal government shows that there is a very big gap between the retirement expectations of Australians, and the reality of what they will face when they reach that point.

The bottom line is that most people will see their retirement savings running out early, meaning that the only choice is to live off the age pension, or to delay retirement plans for many years than currently planned.

The research was done by the Melbourne Institute, and it is an analysis of the latest Household Income and Labour Dynamics in Australia survey.

Key findings:

Retirement age expectations:

• Working men aged between 45 and 65 expect to retire on average at 64.3 years.
• Women expected to retire at 62.5.
• 33 per cent of men and 47 per cent of women said there was ‘no chance’ they would still be working past 65.

Income expectations for a satisfactory standard of living:

• Men estimated they would need $48,500 per annum.
• Women estimated just under $45,000.
• Couples estimated they would need slightly more, at:
  - $50,529 (estimated by men).
  - $48,220 (estimated by women).
• Over 25 per cent of men and 31 per cent of women feel they will not achieve their desired income.

However, that’s the good news! For the scary news, read on.

What Associate professor Roger Wilkins found was that most people’s life expectancy was far greater than their savings expectancy.

His findings include:

• A single male aged between 55 and 59, has a 17.2 year life expectancy after retirement
• However, on average their savings will only last about 5 years!
• Single women will have a 20.7 year life expectancy after retirement
• However, their savings will only last for the first 2 years!

For many people close to retirement, there are only three possible solutions:

a) Reduce their planned standard of living.
b) Postpone retirement, and work longer.
c) Die earlier (not an option!).

The good news in all this is that provided you have 10 to 15 years to go until normal retirement, there is a strategy that can provide the income needed for a comfortable standard of living through retirement.

The solution is investment property, and achieving your first property is easier than you would think, provided you have some equity in your family home.

There are two roads ahead for Australians as they near retirement:

1) Work far longer, and live on far less than they ever imagined.
2) Retire as planned, and live in relative comfort on the income created by sound property investments.

If you are like me, the first option holds no appeal at all!

If you would like to learn more and discuss how McCarthy Group can assist you, click here.

Source: Sampson A; “Put those golf clubs away – retirement is a way off yet.”Sydney Morning Herald, Weekend Edition, June 19-20, 2010.