I believe people should begin retirement planning young and start building their retirement savings from an early age. The problem in Australia is idiotic politicians keep messing with the system making forward thinkers and planners vulnerable to change – they make stupid short-term changes for long-term investments.

As a result of poorly conceived public policy that is neither stable nor consistent, people tend to not lock up funds in schemes that will be eroded in value when the next government changes the rules after a brain wave. Grandfathering rules don’t always apply so investors are forced to make long-term decisions based on short-term policy with ad hoc rules applied when political pressure is applied. Whilst tax incentives are involved, they have been scaled back significantly and losing importance.

I believe to maintain a standard of living one has become accustomed to, ten years of gross income is required for a comfortable retirement in one’s superannuation fund. You need to enjoy the early years of retirement and that means saving for the early years yourself and not relying on the age pension. So if a person is accustomed to a $100k per annum salary, you would expect $1 million in retirement savings. A basic breakdown would suggest a base $50k income would last 20 years, this would assume income and costs are balanced out.

As it turns out, superannuation funds are expensive to administer. Chatting to an advisor, he felt I should go for an aggressive investment strategy in the early years before becoming more conservative in the later part, I thought about it and will look into this strategy. Earnings in the early years would need to be aggressive to maintain the balance. Naturally inflation would need to be accounted for as a basic $50k income in the early years won’t be a great income in 20 years time.

This is why I prefer equities in my portfolio like so many others, you can draw dividends to live on without selling the equities. I am of the belief you need a million dollars in 2020 money to live a decent retirement. Some advisors would say otherwise but you need to ensure you have a sound back-up should another covid-19 or financial meltdown come along. That just gets a 50 year old to retirement day, you want to go at least 10 years – better to plan for 20 years.