Retirement planning is more important now than ever. Even more so for the young. Retirement readiness is getting harder and harder.
We are living longer, which means younger generations need to save much more than previous generations.
Tertiary education costs are increasing at a much faster rate than inflation, making education costs more now than ever. Incomes are not increasing at the same rate, meaning student loans are taking longer to pay off.
The cost of housing continues to increase much faster than inflation, making housing more unaffordable for each subsequent generation. Again, incomes are not keeping up, meaning mortgages are being paid off later in life.
Governments around the world are taking on more and more debt, not helped by the Covid 19 pandemic. Eventually this will need to be repaid either through increased taxes or reductions in benefits such as superannuation. Many from older generations even received pensions from their employers.
This post is not supposed to be a doom and gloom this is impossible so why try article. Quite the opposite in fact. There are some special challenges that will make retirement planning even more important. It’s even more important now to try.
Being financially prepared for retirement used to be a shared responsibility funded by the government, your employer, and yourself. Now there are very few pensions, so your employer offers no help. The government assistance is unlikely to be as generous as previous generations. This puts more emphasis on you.
With less help elsewhere, and challenging factors, it is up to you to provide and prepare. We are paying off our student loans later, our homes later, and we are living longer. In short, we have less time for saving and more time to provide for. Our current national savings rate as at 2019 is an average of minus 0.3%.
This will not be good enough. Poverty in old age will become a very real problem if this continues. Either the situation becomes better and housing and education will become more affordable, or we will need to do something to catch up to the situation.
Hope is not a good strategy though.
If you need help with your personal retirement planning, then get in touch today.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here