Another month and another meeting. When the RBA board met this month, they decided to lower interest rates by 0.25% which all the retailers will welcome with open arms in the final run up to Christmas, as will all of us with mortgages. This also marks the first time since February 2009 that the RBA has made back-to-back rate cuts.

The RBA is taking a pre-emptive strike against a possible further financial meltdown in Europe, a situation that simply will not go away and will have a bearing on the world economy for some time to come. In some ways I think we would all be better off if it all just came to a head and the world could then get into recovery mode and get over it. However, it seems the world finance guru’s will keep looking for band-aids to patch up the wounds in Europe’s financial woes.

Due to good regulation, Australia has a strong banking system, a good level headed Reserve Bank Board and strong trading partners in Asia dependant on our resources. While we are certainly not immune to world financial troubles we are somewhat insulated compared to other countries.

This is a time for consolidation of debts, debt reduction and saving. It may also be time for astute buyers to be getting into the property market.

We have low unemployment, great prospects and truly live in a lucky country. When the world does get some sense back we are well positioned to take advantage of any upswing.

Another thing I’d like to mention this month is retirement. By 2023 the retirement age will be increased to 67 and the number of retirees is set to double by 2047.

This amounts to over 7 million people or 25% of the population, all with greater life expectancies and it is highly unlikely that the government will be able to provide any thing other than a basic pension allowance, probably somewhere around the equivalent of the unemployment benefit.

It is also a fact that currently more than 90 per cent of Australians retire in financial circumstances that are quite different from what they would have expected.

So, how much do you think we need to retire and maintain our current lifestyle?

The Association of Superannuation Funds of Australia, when estimating the weekly and annual household expenditure for a comfortable retirement, suggested the following:

For a "comfortable" lifestyle, a single retiree would need $702 per week ($36,600 per year), whilst a couple would need $939 per week ($48,900 per year).

Modest or comfortable lifestyles may vary, but the figures give an idea of what you need to spend each year.

Financial planners often use the guideline that you’ll need 60–70 per cent of your pre-retirement income, each year, in order to be comfortable in retirement.

A mistake people make is thinking that their cost of living will dramatically reduce when they retire. Some feel that 60-70 per cent of pre-retirement income isn’t enough and you should aim for a retirement income that’s equal to the after-tax income you earned before retirement.

Just something to think about and how you are going to plan and fund your retirement.

Until then please have a safe and happy festive season and a prosperous new year.

Keep well.

Regards,

Gregg Mountford

Negotiator Finance