It’s not just Australia at risk – it’s the globe

It’s not just Australia at risk – it’s the globe

Vanessa Stoykov

I have written a lot about the impending economic tsunami coming in Australia – where up to 80% of Generation X could fall short of a comfortable retirement. But the problem is not just in Australia. It is across the globe, and it’s bigger than you could imagine.

Back in 2015, the World Economic Forum (WEF) estimated that the gap in pension funding across the globe was $70 trillion dollars. That gap is larger than the world’s 20 largest economies combined. And since then, that gap has continued to grow. In fact, the WEF estimates that the gap will be more like $400 trillion by 2050.

These numbers are almost too big to comprehend. Too large to do anything about. But we must do something.

While there is simply not time to prepare for a shortfall this massive around the globe, many of us here in Australia do have time to do something about preparing for what is ahead.

Financial advisers need to be focussing their clients on the plight ahead for their retirement. Encouraging putting more money into super, and finding ways to lower overheads and save more. Also, to help people plan carefully and strategically for the sale at the right time of the family home and to set up legal structures to make giving to the next generation more tax efficient.

For individuals, the focus needs to be on planning how much you would like to live on when you retire. And working back from that. How long will you expect to live? Do you anticipate any health issues? What would you like to leave your children or family?

It’s never too early to start asking yourself these questions, and in fact, the earlier you start thinking about it, the better off you will be. Even if it seems you don’t have much, having a plan about how to effectively use what you have is far better than to go on with your eyes closed to what’s ahead – leaving your future to chance.

While most of us are flat out keeping our head above water day to day, without taking a breath to stop and think about the future, we are making life for ourselves down the track much harder.

Because not only is there a global crisis coming in funding aged pensions, the shift in societies to cope with that will mean the way we live in the present will have to change dramatically. And unlike those baby boomers – and earlier generations that grew up with world wars and depression – this generation is not trained for hardship, particularly in old age.

So I encourage you to cross a day out of your diary and start thinking about what you want your future self to live like. Talk to your partner, loved ones and your adviser. Because by thinking of it you are taking the first step toward changing it. Your knowledge and skillset is needed more than ever.

Until next time,

The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice or its related entities. This information is general in nature and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. To view our full terms and conditions, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *