How Much Super Do I Need to Retire Comfortably?
Updated: May 1
How much do I need to retire? It's one of the most common question financial advisers are asked by working professionals. Mortgage Broker and Financial Adviser ROD LINGARD gives insight and unpacks the common questions he gets asked.
Two of the most frequent questions I am asked are – how does my superannuation balance compare to other people (of similar age), usually quickly followed by how much do I need to retire?
According to APRA, the average superannuation balances are as follows.
Naturally these are averages, and don’t take into account peoples’ individual circumstances.
People may have assets and investments outside of the superannuation regime, but it does make a useful starting point for the purpose of comparison.
How much do I need to retire?
According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, single people will need $545,000 in retirement savings, and couples will need $640,000.
Those figures are based on the assumption that the retiree owns their own home.
For those who don’t own their own home, the retirement savings required to provide for retirement income is higher, to reflect the additional cost of renting.
So what does a ‘comfortable’ retirement look like?
Again, according to the Association of Superannuation Funds, a comfortable retirement will ‘cost’ around $62,000 per annum for a couple and $44,000 for a single person.
A comfortable retirement will provide for things such as regular holidays and travel, a reasonable level of entertainment, having a reasonable quality car. It also means that regular costs of living such as utility expenses do not have a significant impact on the household budget.
The next level down is what the Association of Superannuation Funds refers to as a ‘modest’ lifestyle.
A modest lifestyle will cost around $41,000 for a couple and $28,000 for a single retiree. Not surprisingly, a modest lifestyle provides for fewer luxuries and a far more basic standard of living.
What does this all mean for everyday Australians?
In short, if retirement is on the horizon, it’s time to make a plan. Starting sooner is always better than delaying. It might be stating the obvious, but I’ve never met anyone who says they have ‘too much’ in superannuation for retirement.
If you need to bolster your super savings, there are 3 main ways:
Contribute more to super. Certainly this means you may have to cut back in other areas of spending in order to do so, but as a general rule of thumb, contributions to Superannuation can be incredibly tax effective.
Review the actual investment within your superannuation. The returns from Superannuation investments can vary dramatically. An increase in return of just 1% over the long term can have a significant impact on the final balance of your superannuation.
Consider combining your superannuation to a low cost fund. There is much discussion about low cost funds. Whilst keeping administration costs low is important, the overall performance of the fund is just as, if not more important than cost alone.
You can either choose to go it alone, or engage a financial planner. If you choose to go it alone, there are plenty of online tools to help you along the way.
Alternately, you could engage a qualified planner. A planner should be able to determine if you are on track to meet your retirement goals, and if not, assist you with strategies to get you on track to meet your retirement goals, whatever they might be.
Book a consultation with me
If you'd like to have a chat about your personal situation you are welcome to book an obligation free (one hour) consult with me. You can do that by emailing me or giving me a call on M: 0400 160 461.
Rod Lingard is a Mortgage Broker and a Licensed Financial Adviser at Lifestyle Connexion and can be contacted on M: 0400 160 461. Financial Advice is provided by Rod Lingard – Authorised Representative No: 248734 of MASU Financial Management Pty Ltd | AFS Licence Number 231140 ABN: 78 069 358 498.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.