Work out how much super you’ll have when you retire, and if it will be enough to fund the lifestyle you want.
It’s never too soon to start planning for a better financial future. Earning a comfortable retirement is part of the Australian Dream, and it should be attainable for almost everyone with the right financial planning. In this blog, Wealth Connexion’s financial advisors in Brisbane, discuss how much an average person will need to live a comfortable retirement.
How much super will you need when you retire?
The amount of super you’ll need when you retire depends on:
- your big costs in retirement
- the lifestyle you want
Most people can now expect to live well into their eighties. This means that if you stop working at 65, you’ll need retirement income for 20 years or more.
What are your big costs in retirement?
Think about any big costs that might be part of your retirement plans. For example:
- paying off your mortgage
- rent
- renovating your home
- travel
- medical costs
Ask yourself, what kind of lifestyle do you want?
The Association of Superannuation Funds of Australia (ASFA) provides an ASFA Standard. As a rough guide, the ASFA recommends that should you own your own home and decide to live ‘comfortably’, you’ll need to spend roughly two-thirds of your pre-retirement annual income every year.
The ASFA defines a ‘comfortable’ standard of living to include items such as fast internet and streaming services, frequent leisure activities, a reasonable car and a budget for home and vehicle repairs, the confidence to freely use utilities such as heaters or air conditioners, regular groceries and the occasional restaurant meal.
A ‘modest’ living style means items like a basic car, the occasional takeaway or leisure activities and basic private health insurance.
| ASFA
Retirement Standard |
Comfortable lifestyle
|
Modest lifestyle
|
| Single | $45,962 a year $880 a week |
$29,139 a year $558 a week |
| Couple | $64,771 a year $1,241 a week |
$41,929 a year $803 a week |
How can I start planning for retirement?Source: ASFA, December quarter 2021
When considering retirement, it’s generally advised to try and deal with big costs before leaving your job. Expensive items such as mortgages, renovations and surgeries should be dealt with or acknowledged beforehand, so as not to disrupt your planning and budgeting.
Working out what will be attainable and sustainable for your situation is an important step, and meeting with a professional financial advisor in Brisbane like the ones at Wealth Connexion can be a powerful step in making sure your retirement is comfortable one.
