What is a Self-Funded Retiree

What is a Self-Funded Retiree
What is a Self-Funded Retiree - Australia - Point B Planning

What is a self-funded retiree and how to retire on your own

Key takeaways:

  • Maximum income from government support
  • Assets to invest in when building your retirement buffer
  • Ways to increase your retirement savings

In Australia, there is common confusion regarding who funds the retirement of Australians. There is a misconception that the government is responsible for paying for the income of retirees. Although this is correct to a small degree, the reality is that the government will generally assist only the poorest retirees.

In fact, the maximum benefit provided is approximately $1,488 per fortnight or $35,712 per year as a combined couple. When we compare this to the average income earned ($1,769 per fortnight) or $$91,988 per year for an individual alone. We can see that there is a very steep decline from transitioning from full-time work to full-time welfare.

On the contrary, a self-funded retiree is an individual who does not rely on government support as a source of income and instead relies on income and assets that have been saved during their working careers. Understand that this is not a plan that was produced overnight, it may have taken multiple years and even decades of pre-planning to achieve these outcomes.

So, the next question is, how does one become a self-funded retiree? As a rule, when it comes to retirement planning. Best to try and avoid government support altogether. Instead, invest in assets such as cash, property, shares, and superannuation which are the main means of funding a retirement income for a self-funded retiree.

Strategies such as paying down debt early, investing in assets that produce passive income and making additional contributions towards super are all important strategies for funding one’s own retirement.

If you would like to know more about funding your own retirement, please speak to our financial advisors who service the Yarraville, Seddon, Williamstown, and Altona areas.

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