Barefoot Investor reveals the amount of pension funds needed to retire comfortably
Barefoot Investor reveals the REAL retirement amount you need to retire comfortably – and that’s a lot less than you’ve been told
- Barefoot investors reveal super low amount needed to retire
- Scott Pape says workers don’t need to save the recommended half million
- He said the actual figure is far below as long as retirees own their own homes
The Barefoot Investor has revealed the staggering pension amount Australians need to retire comfortably.
Scott Pape said the figure was much smaller than the nearly $550,000 workers had long been told they needed to save.
The figure is based on the Australian Pension Fund Association standard which claims that one person needs $545,000 and a spouse $640,000.
Mr Pape said workers could retire for hundreds of thousands of dollars less based on research by Super Consumers Australia – a consumer advocacy organization that is a partner of CHOICE.
The organization estimates one person will need to save about $302,000 and a couple will need $402,000. It is based on not paying the mortgage or rent.
The Barefoot Investor has revealed the staggering retirement amount Australians need to save to retire comfortably
Scott Pape claims the figure is far less than the half a million dollars workers have been told they need to save to get rich during their twilight years.
Super Consumers Australia raised the figure after analyzing the Australian Bureau of Statistics data on pension spending and accounting for inflation.
Mr Pape has previously made his own suggestion that retirees need at least $250,000 – in a scheme he calls the ‘Donald Bradman Retirement Strategy’.
“If you own your own home, get an old pension, and you’re willing to do a little paid work, you can retire comfortably for as little as $250,000,” he says.
Mr Pape said retirees would need to work once a day every two weeks to supplement their income under his strategy.
“After all, the super industry has been playing for too long for the millionaires in the members booth,” Pape wrote.
‘What these numbers do is give the average Australian a fighting chance.’
Australia’s pension balances are up even more than most large city home prices over the past three decades but are expected to fall due to rising rates.
A dollar invested when Super Mandatory debuted in July 1992 would be worth $7.67 today, according to SuperRatings calculations.
By comparison, Sydney’s median home multiplied 7.54 times over the same period as it rose from $183,300 three decades ago to $1,382,631 last month, data from Macquarie University and CoreLogic show.
The Melbourne equivalent increased 7.8 times from $125,000 to $975,850 as the Brisbane midpoint doubled 6.92 times from $129,000 to $892,133.
Perth’s median home grew 5.7 times, from $102,500 to $585,114, as the Adelaide midpoint doubled 6.46 times from $108,300 to $699,251.
Like the property market, pension fund balances are likely to fall as the Reserve Bank of Australia continues to raise interest rates to tackle inflation that hit 5.1 per cent – its worst pace in two decades.
Australia’s pension balances have risen even more than most large-city home prices over the past three decades but are expected to fall due to rising rates
SuperRatings expects median balancing funds to fall 3.3 percent in the year to June 30, but this follows a 17.8 percent jump in 2020-21.
This will be the fifth financial year loss since the mandatory super debut in 1992.
The bad financial years included a 6.4 percent decline in 2007-08 followed by a 12.7 percent decline in 2008-09 during the Global Financial Crisis.
The predicted 3.3 percent decline for the financial year just passed would be comparable to the 3.1 percent decline in 2001-02 during the year that included the September 11 terrorist attacks in the US.
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