Noting that eight in 10 Australians eschew formal financial advice, senior financial planner at Omniwealth Andrew Zbik said “hope-ium” wouldn’t be enough to guarantee a comfortable retirement.

“Would you run a business with no business plan, budget or tracking your revenue and expenses? Do elite athletes train sporadically to qualify for the Olympics? In your day job do you rock up and do what you feel like with no direction or key performance indicators (KPIs)? The answer is likely to be no,” he said.

However, most Australians’ financial management doesn’t extend beyond having employment, awareness they possess superannuation and ownership of some shares or an investment property.

Mr Zbik said Aussies hope this will be enough to see them through, but if they can’t answer these five questions, they’re in the dark about their needs.

1.       What is your planned retirement date?

“I’m not talking about a half-hearted guesstimate of oh, say, 65ish, for example,” Mr Zbik said. “I mean, have you set a specific date to retire by?”

He said deadlines have strong powers, and links in with the other four questions.

2.       How much income will you need to retire?

Mr Zbik said Australians should ask themselves what it would cost to live their desired lifestyle in retirement, mortgage and kid free.

“In addition, if you are not working what would you do with your time? Travel more, pursue a hobby, or volunteer with a charity are common ideas,” he said. “Have you then worked out how much it would cost to fund those interests?”

The figure could be $65,000 a year for living expenses and another $20,000 for an international holiday every two years.

3.       What assets will you need?

“If you don’t have an answer for how much income you desire in retirement, this question cannot be answered. Once you do have an income goal, we can work out the value of all the assets you need outside of your home to support that lifestyle in retirement,” Mr Zbik said.

He explained that a retirement income of $75,000 will mean $1.5 million outside the family home, or $3.4 million in 14 years’ time when adjusted for inflation.

4.       What are you currently spending?

Understanding where you spend your money is key to success, the financial planner said, noting that there are apps and programs that will help savers categorise and track spending.

“Knowing where you spend your money will help you be wise with where you allocate your hard-earned cash. Fun and enjoyment now need to be balanced with planning for the future,” Mr Zbik said.

5.       What do you save every month?

This isn’t just the amount of money that isn’t spent, but money specifically put aside for the future.

“Once you know what you are seeking to achieve, a financial plan can then be put in place to help you work towards achieving what you want,” he said. 

“You will continue living in hope of winning the lotto without knowing the goals you are working towards.”