If you’re worried you might outlive your retirement savings, you’re not alone
Not having enough money saved for retirement and outliving retirement savings is one of the biggest financial worries for people worldwide.1
Your super is part of a bigger picture
Your super probably won’t be your only source of income. Australia’s retirement system relies on three pillars – super, the government Age Pension and private savings. If you add in the family home and income from work, there are five potential levers you can pull to adjust your retirement income and make the money go further.
How long will your money need to last?
Planning for retirement can be tricky since we can’t predict how long we’ll live. However, the government’s life expectancy tables can provide us with some helpful estimates. Based on the averages, Australians can expect to live 20 years or more in retirement.
If you’re 65 now, you might expect to live well into your eighties – 85.2 if you’re male, 87.8 if you’re female. So budgeting for more than 20 years of retirement living is a good place to start.
How are you tracking right now?
Start by getting to know your account details. Log in to your Mercer Super account to check your current account balance, investment options, and how much and how often you receive employer contributions. While you’re there, explore the tools that can help you understand your position now and in the future.
How quickly will you spend your savings?
How long your savings last depends, in part, on your lifestyle preferences and the choices you make. You can learn more about retirement standards and lifestyle choices.
Mercer Super’s e-Advice tool includes a retirement budget based on the Association of Superannuation Funds of Australia (ASFA) retirement standards. You can even adjust your expectations from modest to comfortable to rockstar.
Your super is designed to support your retirement
Super is designed to help you save for retirement and to then provide you with an income when you retire. When you start a pension from your super – either from an allocated pension or a TTR pension – the government requires you to withdraw a minimum amount each year.
The minimum amount you must withdraw each financial year is a percentage of your account balance and is based on your age. As you get older, you need to withdraw a larger percentage of your balance.
Retirement calculator
The retirement income calculator is designed to help you visualise/estimate how much super you’re on track to save, what your retirement income could look like, and how long it might last.
Our e-Advice tool offers personalised advice about your Mercer Super account, including investment and contribution strategies, to help you understand the retirement lifestyle you’re on track to achieve and how long your savings may last.
Additional resources
What other sources of income do you have?
Other sources of retirement income can include private savings, paid work, or the government Age Pension. These sources could help you adjust your retirement income expectations, and make the money go further.
Could you return to work?
Many Australians do return to work. In fact, the workforce participation rate of Australians aged 65 and over has more than doubled over the past 20 years. Read more about working in retirement.
Consider your home as part of your retirement plan
For many Australians, their home is their biggest financial asset. If you own your home, there are a few ways you could consider using it to help fund your retirement lifestyle for as long as you need.
We recommend you seek financial advice before accessing the equity in your home.
Downsizer contributions
Selling your home and downsizing to a more affordable location could leave you with money to spare, particularly if you’ve paid off the mortgage. If you’re aged over 55, you may be able to use some of the proceeds of the sale to give your super a serious boost with up to $300,000 in a one-off downsizer contribution.
If you have a spouse, they may also contribute up to $300,000 to their super – bringing the potential contribution amount up to $600,000 per couple.
You can find more about downsizer contributions and eligibility criteria on the Australian Taxation Office (ATO) website.
Commonwealth Home Equity Access Scheme
The government allows eligible older Australians to access the equity in their home through an Australian Government loan. You can choose to receive fortnightly payments to supplement your regular income or receive lump sum advance payments to help with unexpected expenses or fund one-off costs.
Find out more about the scheme and eligibility criteria at the Department of Social Services.
Don’t forget the government Age Pension
The Age Pension is income support paid by the government to eligible Australian retirees. It can be used as a primary source of income or as a welcome boost to help your super go further, for longer.
To receive the government Age Pension, you need to be 67 years or older. You’ll also need to meet other criteria such as residency requirements, the income test and an assets test. Even if you’re not eligible for the Age Pension on the day you retire, you may become eligible as you draw down your super balance.
Additional resources
Download our Age Pension fact sheets to decide if you’re eligible and learn how to apply.
Don’t hope for the best, plan for it with financial advice
As a Mercer Super member, you have access to limited financial advice at no additional cost.
Explore more: it’s your time to prepare
Disclaimer: This content has been prepared on behalf of Mercer Superannuation (Australia) Limited ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust (‘Mercer Super’) ABN 19 905 422 981. Any advice is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any advice, please consider the Product Disclosure Statement (including incorporated documents) and Financial Services Guide available at mercersuper.com.au. The product Target Market Determination can be found at mercersuper.com.au/tmd. The material contained in this document is based on information received in good faith from sources within the market and on our understanding of legislation which we believe to be accurate.
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* Any information in this material regarding legal, accounting or tax outcomes does not constitute legal advice or an accounting or tax opinion and prior to relying and acting on this information it is important that you seek independent advice from a qualified lawyer or accountant regarding this information. Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.
Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.