This was the title of a recent survey by IPSOS of over 2000 adults to get a snapshot of current attitudes. When asked to define a comfortable lifestyle, more than three quarters of people said “having enough to do what I want when I want to do it”. International air travel has doubled in the past ten years, 35% of parents are paying private school fees and eating out several times a week has become the norm for many. So is this the new comfortable as opposed to inspirational?
What were considered luxuries not too long ago (OK, showing my age) are now considered normal living costs by many in the survey. While Australia has enjoyed 25 years of growth and survived the GFC, wage growth is still extremely low.
How are we paying for our new ‘normal’ and is this at the expense of future lifestyle?
Almost half of the people surveyed spend all of their income every week and are living ‘pay to pay’. Even within very high income households (<$150k) one in four spend 100% of their household income. This has in turn increased household debt significantly.
Yet when asked about their priorities, the top two were ‘maintaining lifestyle’ (not a surprise) but also ‘financial security’. One in five were counting on receiving an inheritance to pay off the mortgage and two in five did not believe they would be able to fund their own retirement. 40% not believing in being able to retire doesn’t sound like financial security to me.
There are certainly some significant challenges raised in the survey, especially around conflicting objectives. Balancing current lifestyle versus future lifestyle (retirement), needs, wants and objectives are some of the issues that a good financial planner can assist clients to gain some clarity around. They can help take away some of the complexity.
In the meantime, try not to stress too much about what is out of our control - volatile markets, China issues, American elections, changing legislation, housing bubble. There are always lots of things to be concerned about. Instead, focus what is within our control - our spending choices, strategy and structure, investment decisions and on what is important to us in our lives.
Early next month is the federal budget. We will send a summary the following day on what impact it is likely to have on clients and any strategy changes that might be needed.