You might want to travel. You may want to dine out every week at a fancy new restaurant. You might just want to help your children and grandchildren. You might want a busy life. Or the chance to sit back and relax without any money worries.
Then there are one-off costs to think about, like a new car or a deposit on a retirement village. And you might need money for any health issues that happen in retirement.
Okay, how much super will be enough?
The important thing is to start thinking about all of this early on. Don’t wait until you’re 60. First, work out how much money you think you’re going to need in retirement. And then figure out how much superannuation is going to be enough to get you through a happy retirement.
There are lots of different ways to work out how much super will be enough for you in retirement, and lots of online calculators to help you.
The Australian Securities and Investments Commission (ASIC: www.asic.gov.au), for example, has done some number crunching. They estimate that by the age of 65, a single person who wants a ‘modest’ lifestyle (with annual living costs of $23,032), would need a lump sum of $300,000 (in today’s money).
For a ‘comfortable’ lifestyle (annual living costs of $41,830), they say you’ll need a lump sum of $544,000 by the age of 65. Couples will need a lump sum of $431,000 for a ‘modest’ retirement and $744,000 for a ‘comfortable’ retirement.
The Association of Superannuation Funds of Australia’s Retirement Standard (www.superannuation.asn.au/resources/retirement-standard) has even higher lump sum figures. They say that to have a ‘comfortable’ retirement, single people will need $430,000 in retirement savings, and couples will need $500,000.
In 20 or 30 years, these numbers will look very different when you take the cost of living into account. However, the ‘Standard’ is updated four times a year to factor in the rising price of items like food and utility bills. It also looks at people’s changing lifestyle expectations and spending habits. Plus the costs of things like health, clothing, travel and household goods.
As the cost of living goes up each year and things get more expensive, the calculations for how much you’ll need in retirement are adjusted.
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Disclaimer: Published by Shartru Wealth Management Pty Ltd. ABN 46 158 536 871 AFSL 422409. The advice is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance