Talk retirement and be popular

Talk retirement and be popular

Vanessa Stoykov

When it comes to dinner party conversations, retirement is not usually one that lights up the room, especially if you’re in your 40s. For most, it still seems a long way off, so much so, that many don’t even want to think about it as they have no idea when they will be able to retire, or if they will even be able to afford to.

The statistics show, plain and simple, that when I retire (I’m currently 44), one in every four Australians will be in retirement, compared to one in 12 today. I realise that unless we can turn around this lack of engagement, planning and knowledge about retirement, life for my generation is going to be pretty uncomfortable.

Now, when I say uncomfortable, I am not talking about ASFA’s definition of a ‘comfortable’ retirement (which suggests that on retirement a lump sum of $640,000 is needed for couples, and $545,000 for singles, provided you own your own house). Instead, I am talking about the uncomfortable world of not being able to live the life you are used to, as the government age pension is unlikely to stretch to cover the number of retired people there will be in the future.

The reality is, if you do go on the age pension, it is unlikely to cover more than the bare minimum of living expenses. Meaning you will still need to fund the rest yourself.

And when a ‘comfortable’ retirement includes only a $20 a week budget for entertainment, I start to wonder how people of my generation are actually going to live. Because $20 a week gets you a couple of coffees and a biscuit. That’s it.

Eating out, weekends away, trips with friends, all those things have to be costed in now if you want to continue to enjoy them in retirement. And it’s not unusual to think that in reality, a good lifestyle with all those things could cost $80,000 a year for a couple, for the remainder of their lives. This in itself is not a huge sum of money, but if you own your own home, and are not living like Hugh Hefner, then it most likely would provide you with a pretty good life.

If you start to do the math, $80,000 per year for 20 years, is $1.6 million. But what if you live longer than 20 years in retirement? Will you need to work until you’re 70? Will your health allow for it? Calculate for 30 years in retirement and you’ll soon find out that $2.4 million is needed.

The numbers are big, and the time frame to accumulate this kind of money is ever shortening. Most people in big cities think the fact that they will own their house, and it’s worth, most likely, millions will be enough. However, even this is false security. Australia is a country where most people retire where they have worked and lived, rather than moving to cheaper locations. This means that even if you sell your house, and get something smaller, you still have to live, and buying anything is expensive.

This all seems like bad news. And in some ways, it is. But the good thing, at least for Generation X, is that there is time to make it happen. A focus on super, and making sure you have enough, as well as understanding the kind of retirement you want, and costing it out, are all things that will definitely help change the outcome. Even planning to move somewhere less expensive earlier, so that you have a chance to make friends and form a support network around you before retirement, could be part of a solution.

So at your next dinner party, I challenge you to bring up retirement, and make it sound exciting. See how your friends react, how ready they are, and whether you can inspire them to think deeply now about how they want to live the last third of their lives.

It could be the one conversation that changes everything.

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