A study by Princeton University* recently concluded that people who earn $75,000 each year are generally more satisfied with their lives than those earning less. Yet interestingly, earning more than $75,000 did not significantly increase happiness.
“More money does not necessarily buy more happiness, but less money is associated with emotional pain,” that authors wrote. “Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individual’s ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.”
The study reviewed the responses from 450,000 Americans in 2008 and 2009.
If we look at the 2010 average full time ordinary earnings of Australians** (and assume a rough parity with the US dollar), we can see that Tasmanians fall the shortest (with an average of $55,103) however those in the ACT earn an average of $75,348 – which of course meets the ‘happiness benchmark’. Those in NSW fall somewhere between the two with an average of $65,707.
Life for those in the retirement years can of course be less financially demanding. For a comfortable retirement however, the numbers are not far behind those mentioned above. According to the latest Westpac ASFA Retirement Standard, for a couple to live comfortably in retirement, they will need around $54,000 a year in income.
Their study defines a comfortable retirement lifestyle as one that would enable an older, healthy retiree to be involved in a broad range of leisure and recreational activities and have a “good standard of living” through the purchase of household goods, private health insurance, and travel for example.
This is a big increase above what is provided by the Age Pension. A couple receiving the Age Pension would receive $28,070 each year, which may just provide the basics.
“Money is the sign of liberty. To curse money is to curse liberty–to curse life, which is nothing, if it be not free.” –de Gourmont
For most of our clients, planning for a comfortable retirement is one of their key goals. Most will have a tailored strategy to help put them in the position whereby they can afford a comfortable retirement that can include holidays and eating out etc.
As you know, there are several strategies that can help propel your retirement savings. These strategies work best when they are customised to your unique circumstances and goals.
If you or someone you know would like to review how you’re tracking towards having enough income in retirement, we would be very pleased to discuss it. Contact us for more info.
The information in this article is general in nature. You should obtain professional advice tailored to your circumstances before taking any action.
* Success Magazine, January 2011, p.42, Princeton University’s Woodrow Wilson School