Highlights
- There are particular questions you need to ask yourself before retiring.
- There is a 'sweet spot' in superannuation.
- The FIRE movement is a trend some are opting into.
'May PERAan' is SBS Filipino's new podcast series which features financial experts seeking to answer the most common questions about money and finances.
"Some people don't want to retire because that's when they really age. Life expectancy is longer now and people like being productive," finance expert Maria Papa shares.
However, for those who would rather spend their days taking up golf or spending time with grandkids than in the office working on a new project, Maria shares that you need to make certain you have enough to live on when yo retire.
Listen to the podcast
LISTEN TO
Magkano ang kailangang laman ng super ko para makapag-retiro ako?
SBS Filipino
18/08/202110:24
Questions to ask yourself
According to Maria, ask yourself these questions before you consider retirement:
1. How much do you currently have in your super?
2. What kind of work do you do?
"If you're 60 years old and you work as, let's say a tradie, you're not sure if you can still work in the next 5-10 years. This is because the body of a tradie is subject to wear and tear when he works," Maria shares.
"If you're working in an office job that is not physically taxing, then you can possibly still work in the next few years."
The sweet spot in super
Maria shares that there's a "sweet spot" in super wherein you can still draw down from what you've saved and combine it with your aged pension.
"The magic number for super is 253,000 AUD for a single person. If you don't have much assets [a house is not included in the asset test], you can qualify for aged pension if you are 67 years old and above. Aged pension is about 24,700 a year."
While the aged pension doesn't sound like a lot, Maria says that if you combine it with your super, you may have more than enough to sustain you.
"If you draw down to five percent of your super, that could be enough for you to live comfortably.
"If you're earning 1,000 AUD, which is the average of a middle income earner, finance experts project that you need about 65% of that to retire on."
Salary sacrifice
If you're still worried if you would have enough super to retire on, Maria suggests to opt for salary sacrifice.
"If you're still working, but with a fully-paid home, no dependent kids and you don't spend on much, you can save 50% of your income. Put your savings in your super; remember though that 25,000 AUD is the cut-off point every year. If you exceed that, you get penalised."
Maria also notes that there are people in their 30s and 40s who have opted into the Financial Independence Retire Early (FIRE) movement.
"Those who opt into it save around 70% of their income. If you can do that and put it in your super, you can grow your retirement fund.
"However, if you really don't have enough in your super, the aged pension is there. That may not be enough for some though.
"If you have a home, you may want to sell and downsize; but before you make big decisions like that, make sure to consult with a financial planner first."
ALSO READ / LISTEN TO
Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.
