Superannuation Alert! The Current Return on A $1M Super Investment is Equivalent to the Age Pension

Sobering news through from retirement firm Challenger, showing that assumptions and assertions that $500,000 or even $1 million in super, in the current environment, will guarantee a comfortable retirement are suspect.

The brutal reality is a fair price for an age pension in today's interest rate environment is about $1 million. For that amount, a couple will get $1297 a fortnight, or $33,717 of income a year. That's right; the full age pension (including supplements) would cost a 65-year-old couple a surprising $1,022,000 to buy today. For a 65-year old single woman, an age pension-equivalent income stream of $860 a fortnight for life, including supplements, or $22,365 a year, would cost $666,000.

An important point to remember is the age pension is a safety net for those without the means to support themselves with dignity in retirement. A comfortable retirement would cost more. This comes after the government's intergenerational report found that by 2055, Australians' life expectancy would have climbed to 95.1 years for men and 96.6 for women, compared with 91.5 and 93.6 for people born today – reflecting the need for more retirement planning.

So, what are our options??

Economy grows at fastest pace in four years | Quarter of a century without recession

The second-quarter growth figures also confirm that Australia has now gone without a recession - commonly defined as two successive quarters of negative growth - for 100 quarters, or 25 years.

The only developed economy that has enjoyed a longer run of continuous growth is the Netherlands, which chalked up a 26½-year expansion between 1981 and 2008. Today's readings suggest that Australia remains on track to beat that record.

With Interest Rates at the lowest for our generation, the signs are positive for future prosperity, for those who invest successfully in property!

Have a great weekend and catch you next week!

Troy Gunasekera