Everyone who watches the news would be aware of the struggles that retirees face in Australia. It’s not all cruise ships and never-ending holidays.

It’s tough… retirement is daunting. Work for 40 plus years to one day stop working, but then have to manage your retirement savings to make sure they are going to last for maybe 30 plus years of retirement.

That’s a big concept to get your head around.

It’s made all the more difficult by the thousands of different options available when it comes to what to do with your retirement savings.

I met with a woman last week who has just under $400,000 in a retirement pension. On that money, she was paying an investment fee of 1.00% plus a 0.26% admin fee. You might be reading that and thinking, “That doesn’t sound too bad”. But when you convert that into a dollar figure, it works out to be $5,040 per year in expenses.

All of a sudden, 1.26% looks very different!

The money was all invested in one investment option, which meant it was not set up to deal with the short, medium and long-term timeframes that a retiree must be planning for.

We were quickly able to look at an alternative option which killed two birds with one stone…

We can move the money to a retirement income product that charges a fraction of the price and at the same time, set up the investments within the pension to ensure it can achieve long term growth while dealing with the potential of things going down in the short term.

This is what a sensible, logical, well-thought-out plan for retirement savings looks like.

All up, the move will see fees drop from $5,040 to $809… a saving of $4,231.

Now a saving in fees means the money doesn’t get paid to someone else, it is kept by the owner… it’s a $4,231 pay rise!

$4,231 sounds to me like a pretty nice holiday! What does it sound like to you? I bet you could pretty quickly write a list of 100 things that you would rather spend $4,231 on than paying it to a super fund.

The decisions you make with your retirement savings really are crucial. While it’s vitally important to try and put enough away for retirement, the numbers of what happens with that money are fascinating. Studies show that retirees save 10% of their retirement savings while working, 30% comes from the investment earnings on those savings during their working lives, BUT 60% comes from the investment earnings they generate DURING retirement.

If you are not sure if your retirement savings are set up for your maximum benefit, get some INDEPENDENT financial advice. That’s where I can help.

Cheers,

Daniel

If you’d like to find out more about how INDEPENDENT financial advice could help you manage cash flow, pay off the mortgage faster, get the most out of super and invest wisely, then get in touch on 0411 484 464 or head to wealthtrain.com.au.

Daniel McGregor is the man behind Wealth Train and is a member of the Independent Financial Advisers Association of Australia. This advice may not be suitable to you because it contains general advice which does not take into consideration any of your personal circumstances. All strategies and information provided are general advice only.

Daniel McGregor and Wealth Train are authorised representatives of Independent Financial Advisers Australia AFSL 464629