Are you on track?

How often do you check whether your retirement savings are on track to finance your planned standard of living in retirement? Such check-ups are a crucial part of sound financial planning.

One of the most common times for a retirement-savings check-up would be when individuals enter the final decade or so before their intended retirement date.

Such a check-up may encourage you to really concentrate on maximising your super in the countdown to retirement and possibly to reconsider your target retirement date.

Ideally, of course, retirement-savings check-ups should be undertaken throughout a person's working life to see if the savings are growing adequately.

Ross Clare, research director of the Association of Superannuation Funds of Australia (ASFA), writes in the October issue of the association's magazine Superfunds that individuals and Government policymakers "perennially" ask the question whether retirement savings are on track.

In his cover story - headed Is super on track? - Clare writes that individuals are interested about whether they can afford their wanted retirement lifestyles. And policymakers want to know whether Australia's retirement savings will be adequate and whether some pressures will be taken off the age pension.

Clare notes that superannuation coverage and the amount of super savings have significantly increased since the introduction of the superannuation guarantee scheme in 21 years ago.

However, his article clearly shows that the latest super balances at the age of likely retirement are still markedly below the amount needed to finance what ASFA regards as a "comfortable" standard of living in retirement. This remains the position when the age pension is taken into account.

The latest ASFA Retirement Standard report estimates that a "comfortable" standard of living would cost a single person $41,197 a year or a couple, $56,406. (The issue of what constitutes a "comfortable" living standard is debatable.)

A table prepared by the Australian Bureau of Statistics for ASFA lists the average financial assets of employees aged 60-64 years of age in 2011-12 as: cash, $19,858; shares, $10,663; and superannuation, $183,254.

Are your retirement savings on track to meet your retirement goals?

Robin Bowerman, Vanguard Australia.  Rick Maggi (Westmount. Financial Solutions.)