My definition of financial wealth is how long I could support myself at my current standard of living if I stopped my physical work or employment today.It is now a common realisation that Australians have to plan for their own future and retirement as our economic situation is not going to handle the explosion of Baby Boomers hitting the pension market. In the 1950’s and 60’s there were eighteen taxpayers to every pensioner. In the 90’s there were six taxpayers to every pensioner. It is estimated that by 2020, there will be one taxpayer to every pensioner.
Clearly, one taxpayer will not be able to support a pensioner, as well as contribute to community services (such as roads, hospitals, healthcare systems and education) for future generations. The Australian Bureau of Statistics has shown that 80% of the population will retire on less than $14,000 per annum and only 3% currently retire on more than $40,000 per annum.
At today’s interest rates, a retirement income of $40,000 would mean an investment of approximately $1,000,000. If you calculate this forward at an inflation rate of 4% over twenty years, the average Australian would need at least $2,000,000 invested, in order to receive the equivalent monetary value of a $40,000 pension today.
Have you actually sat down and worked out:-
- How much money you need in retirement.
- How long before you plan to retire.
- What savings you have now.
- Therefore, how much you need to be saving (or accumulating in wealth) each year to achieve this.
It is clearly obvious those who don’t want to be living on the poverty line in the future, need to be making sound financial decisions in order to live comfortably in the future. Many of us, however, are after more than this.
Many of us are not just planning for retirement. We are planning for next year, the year after, or ten years from now, because we all now realise that it is genuinely possible to create significant financial changes for our future. Applying a few investment tools along with a little effort and some financial know-how, can create significant wealth relatively quickly. 
- How would you define your current financial position?
- Would you consider yourself wealthy today?
- What is your definition of being financially wealthy?
If you were no longer able to be whatever it is that you do currently to earn income, how long could you sustain your current standard of living ? Have you considered how you would meet the mortgage, pay the bills, buy the groceries, do all the things that you need to sustain your current standard of living? 
- Would that be enough to support you through retirement, or when would your funds run out?
- Would it be ten years?
- Would it bethree months, one month, or would it be next week?
Unfortunately, for too many Australians, it would be next week!
Sometimes a reality check is the best medicine to motivate us to make some needed changes in our plans. Over the coming weeks I will be posting a series of articles on how to break the cycle.
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