A whopping 81.3% of Australians could fall short when it comes to being able to afford a comfortable retirement, new research from Griffith University and leading financial education service, No More Practice Education has revealed this week.
Current figures reflect that in 26 years time when a majority of Gen X will be retired, or in the process of retiring, a comfortable self-funded retirement is likely to require a savings balance of $ $2.09 – $3.98 million dollars.
The government already cannot afford to provide meaningful support to the masses. For example, the age pension today covers only a third of what is considered a ‘comfortable lifestyle’ in retirement, and who knows where this will end up by the time the next generation is ready to retire. This is why personal retirement funds are more and more so becoming the only way to guarentee a comfortable retirement.
Respected finance industry thought leader and Founder of No More Practice Education, Vanessa Stoykov, created Learn from the Money Masters – The Investment Series so that Australians are equipped to make the smartest financial decisions possible so that they are able to build adequate enough personal retirement funds.
The six episode series, launching on October 14 at 12.30pm on Channel 9, will allow viewers to learn from industry experts about how to make the most of their investments, and demonstrate how anyone can think like an investor. It begins with former Neighbours star Blair McDonough realising he and his family are completely unprepared for retirement, and follows his journey of learning how to grow his wealth from the best money masters around the world.
Vanessa says, “Although these numbers highlight the ‘worst case’ situation, preparing for this low growth scenario is essential because it’s been occurring in countries like Japan for the past two decades, so there is nothing to say it won’t happen to us too.”
Luckily, an enormous $3.5 trillion dollars is expected to be passed on from Australian Baby Boomers to their children over the next twenty years. Calculations reflect that from this, 75% of all Gen X & Y with surviving parents will inherit $110,000, and if invested wisely, these funds could set up Gen X and Y’s future. However, without smart investment, this would create a significant event that’s being dubbed ‘the economic tsunami’.
Vanessa Stoykov explains, “The expected inheritance figure is a huge amount of money that Gen X and Y is predicted to receive, however the unfortunate truth is that Australians simply don’t know how to invest it. Through decades of experience in the wealth creation space I’ve learnt that to truly grow long term wealth, people need to ‘unlearn’ everything they think they know about money.”
Vanessa adds, “I can wholeheartedly relate to why people get overwhelmed when it comes to thinking about their retirement funds. For most people retirement seems like forever, or not something they are going to be able to do. The good news is that reinvention is the new retirement, and it’s entirely possible for Generation X and Y to achieve their goals.
“Although it’s daunting, the reality is that for a comfortable retirement (according to ASFA’s standards), each person in today’s terms will require $1.11 million (at 5% earnings rate with no age pension), or $910,000 (at 7%). This is no easy feat, and although it’s entirely possible to achieve, it takes time, so people have to start now.”
To help individuals achieve their financial goals, Vanessa and the team of experts from Learn from the Money Masters – The Investment Series share their tips on how to get started:
1. Acknowledge bad habits. Admitting that you need assistance when it comes to money, saving, and investing can be tough, as can pinpointing where you’re actually going wrong. However, this is an essential first step to bettering your financial situation. Taking an online self-assessment questionnaire will help determine exactly what you need to unlearn about money.
2. Focus more on the long term, rather than short term goals. It’s important to think about and make a list of your long-term future goals and ambitions so you have something to work towards. Where do you want to be in 5, 10, 20 or even 50 years’ time? From here, put a cost to this dream and use the ASIC calculator to work out if you are on track to make your dreams a reality.
3. Stop placing too much value on materialistic items. Often when people realise how much money they need to stop spending they feel as though it’s impossible. However, by being conscious of the instinct of ‘desire’ and limiting the amount of money spent on items that have no long term intrinsic value (such as expensive cars, designer clothes, and things that only bring you joy for a short time), the saving process fastens rapidly.
4. Change what you believe. Many people fail because they are too trusting in what they learned from their parents and upbringing. However, this is rarely the absolute truth about money or investing.
5. Be prepared to take action. Even if you follow all of the above steps, often the hardest thing to commit to is actually doing something to change your situation. Most people delay action because they are delaying, on a grander scale, pain. They fear what this action might mean when it comes to changing their day to day lives to prepare for the future, but it doesn’t have to be difficult. For me, the biggest single thing I did to change my financial future and take action, was to pick the right financial adviser – it was that simple.
Vanessa concludes, “No matter what financial position you are in, or how much you earn, the most important step is to start preparing for the future now. Don’t wait, otherwise time that could be used to capitalise on the power of compounding is slipping away, and you might not be able to live your dreams or enjoy the retirement you deserve. Time waits for no one.”
For more information visit theinvestmentseries.com.au to download an eBook on understanding how to become an investor and choose the right adviser to help you reach your financial goals.
Vanessa Stoykov has over two decades of experience in the wealth creation space, and is a highly respected finance industry thought leader. Founder of No More Practice Education, and Founder and Chief Executive of Evolution Media Group, Vanessa is also the creator of the Channel Nine’s Learn From The Money Masters: The Investment Series, and soon to be author.
Vanessa believes that to truly grow long term wealth, people need to UNLEARN everything they think they know about money. She has been dedicated to helping professionals and financial advisors learn how to grow wealth by focusing on ‘educating the educators’ with new techniques to assist them in better communicating and serving the wider community. Her client partnerships include BT Westpac, UBS, Perpetual, AMP, CBA, and dozens more.