When it comes to the question of retirement, do you know how much super is going to be enough to sustain your lifestyle through a long, active and happy retirement?
When it comes to your superannuation – size does count.
Your employer contributions may not be enough to ensure your financial security when you retire, so contributing to your superannuation throughout your working life is the best option.
But working out how much you need to retire is not easy. You need to take into consideration how long you are likely to live, what type of retirement lifestyle you want and any future medical costs that are associated with aging.
As a guide, a couple looking for a modest retirement may be looking at average living costs of around $34,000 per year, whereas a couple looking to retire more comfortably may be looking at just under $60,000 per year. Another option to help you estimate how much you will need is to assume you need around 67%, or two thirds of your current income to be able to maintain the same standard of living in retirement*.
Based on the Association of Superannuation Funds of Australia’s Retirement Standard, single people will need to have around $430,000 in retirement savings, and couples around $500,000 to sustain a ‘comfortable’ retirement. This takes into account an annual domestic holiday, eating out, leisure activities etc.
Table 1: Budgets for various households and living standards for those aged around 65 (March Quarter 2015, national)
|Total per year
Table 2: Budgets for various households and living standards for those aged around 85 (March Quarter 2015, national)
|Total per year
These ‘standards’ are updated 4 times a year to take rising costs of food, utilities, fuel and changing lifestyle into consideration and includes the costs of healthcare, travel, leisure activities, household goods and clothes.
Statistics show that people are living longer, which means longer retirements for many…meaning that you may need a lot more money than you think.
How money you need will entirely depend on the type of lifestyle you want in retirement, but I would be fairly certain that most of us would be looking it to be active and comfortable. If you would like to have a chat to me about your superannuation and how we can ensure that you can live out your retirement dreams, drop me an email to [email protected] or call the office on 5331 6550.
*source: Association of Superannuation Funds of Australia’s Retirement Standard