According to Fiduciary Financial Services co-founder Andrew Crawford, retirement planning is too focused on building a nest egg instead of looking at retirement in its totality – being health, savings, income and what makes people happy in their retirement years.
“It means that instead of simply aiming to accumulate a big nest egg, broader questions need to be asked about retirement goals that go beyond a dollar amount.”
“Retirement involves being healthy and doing the activities people enjoy, of finding fulfilling ways to replace the time once spent at work while having the peace of mind of being able to afford it,” Mr Crawford explained.
Instead, traditional calculators focus on creating a larger pool for retirement, which Mr Crawford highlights is a flawed system, which could be narrowed down to how much do members need on a fortnightly basis to live the lifestyle they want.
“These planning tools also can ignore the fact people get their retirement income from multiple sources. Aside from super, it can be rent from an investment property, the Age Pension, or drawing down on the equity in their home.
“For example, understanding how much of the Age Pension people are entitled to can make a huge difference. Ensuring they get the maximum is important because it’s effectively a free lifetime retirement income stream.
“It’s often forgotten that people’s spending in retirement will change dramatically in line with their health. As they go from being healthy and active to requiring various levels of care, their spending can drop as much as 40 per cent – having a huge impact on how long and how much retirement income they need,” Mr Crawford concluded.
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