In Australia, 65 per cent of workers who lose their job through retrenchment are men.
In Australia, 65 per cent of workers who lose their job through retrenchment are men.1
The highest retrenchment rates were for those aged 55 to 64 (18%), followed closely by those aged between 45 and 54 (13%).2
And, unfortunately this is the same group of people who will find it hardest to find a new job. In 2003/04, 32 per cent of all unemployed persons aged 45-54 years were long term unemployed (a period of 52 weeks or more).3
These figures highlight a problem in the adequacy of some men’s superannuation savings and plans. Instead of having until age 65 to save and contribute to superannuation there is the very real threat that many men will be forced out of the workforce before they turn 55.
Grant Salmon, Navigator’s chief operating officer, said lack of superannuation savings is an issue for many different people but it is one that can be rectified with some deliberate forward planning.
"Working men need to be aware of the statistics and not simply expect to work to age 65 without encountering hurdles. Many men find themselves forced out of the full time workforce before expected.
Instead of being able to enjoy early retirement they find they are either unemployed or under employed with only the barest means to support themselves. And at the same time they have been denied the working years in which they had anticipated contributing extra to their super to give them the quality of life in retirement they had expected," said Grant.
"It is generally agreed most people need to invest a total of 15 per cent in superannuation, including the current nine percent Government’s Superannuation Guarantee (SG), over the course of their full 45 years working life. This should generate sufficient assets to provide 60 percent of their pre retirement income," said Grant.
By being prepared and planning for retirement during the early years of employment you can limit the annual financial outlay and still ensure you have plenty of available funds by age 55. And if you are lucky enough to work until age 65 every cent you put aside into superannuation will be a bonus for you and your family.
For example:
| AT AGE | Annual salary | SG only super | Start extra, | AT AGE 55 Value of extra contributions | Value of total contributions (inc 9% SG) |
| 30 | $50,000 | $20,000 | 6% = $3,000 | $105,000 | $313,100 |
| 40 | $50,000 | $80,000 | 6% = $3,000 | $51,200 | $267,500 |
| 40 | $50,000 | $80,000 | 15% = $7,500 | $128,000 | $344,200 |
| 30 | $90,000 | $35,000 | 6% = $5,400 | $189,000 | $561,000 |
| 40 | $90,000 | $140,000 | 6% = $5,400 | $92,100 | $474,500 |
| 40 | $90,000 | $140,000 | 15% = $13,5000 | $230,300 | $612,600 |
Calculations are in today’s dollars – assumes investment rate of return from growth assets of 4% pa after all fees and fund tax on investment earning at effective rate of 10% after franking credits, etc. 4% pa has been used rather than, say, 7% pa and an assumption of 3% pa inflation, so that spending power of end result is comparable to today’s prices. Balances at ages 30 and 40 are assumptions. Values are before any tax on benefits.
"As you can see, ten years is a long time to delay your superannuation savings and can make a considerable difference on your balance and the amount of catch up you are going to have do if you decide to delay your contributions until your forties," says Grant.
By beginning personal contributions at age 30 you are well on the way to the retirement of your dreams. Research shows that a single person in retirement will need $32,0004 a year for a comfortable retirement and to do this they will have to have $520,0005 in their superannuation fund.
For further information on your retirement needs and other areas of financial planning please contact a financial adviser who uses Navigator.
1Australian Bureau of Statistics, Retrenchment and Redundancy, Australia, August 2002, Canberra.2Australian Bureau of Statistics, Australian Social Trends 2000, work – under utilised labour: retrenchment and redundancy, Jan 2000, Canberra.
3Australian Bureau of Statistics, Year Book Australia, Labour – article mature aged workers, January 2005, Canberra.
4The Association of Superannuation Funds Limited, Retirement Living Standard detailed budget breakdowns, Comfortable lifestyle and modest lifestyle, February 2004, Sydney.
5Kelly,S, Forecasting wealth in an ageing Australia – an approach using dynamic microsimulation, National Centre for Social and Economic Modelling, Canberra, June 2003.
For further information please contact:Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892 Mobile: 0407 966 632
Notes to editors:
- Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc. Through these companies we provide products and services in the areas of wealth creation and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Aviva Australia is part of Aviva plc, the world’s fifth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
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