How much do i need to retire?

Whether you are planning on retiring in the short term, or you want to set some goals for yourself in 20-30 years, this blog is for you.

The big question is, what’s your number?

Your ‘number’ is the level of income you require each year to pay for your cost of living and lifestyle. This can be difficult to think about, as you are probably accustomed to receiving regular income from employment/work. In retirement you need to live off the assets that you have accumulated from a life of working.

So where do I start?

The ASFA Retirement Standards Report by the Association of Superannuation Funds of Australia is an essential resource for individuals approaching retirement or thinking about what retirement looks like. This is a great place to start.

This report sets the benchmark for estimating the annual budget needed by Australians to sustain a modest or comfortable standard of living in retirement. This comprehensive report considers various factors such as housing, healthcare, transportation, leisure activities, and more, to determine the required income for retirees.

Modest Lifestyle:

The ASFA Retirement Standards Report defines a modest lifestyle as a basic level of retirement living. It covers essential needs like food, shelter, clothing, and basic leisure activities. The report outlines the retirement savings figures necessary to maintain a modest lifestyle during retirement.

Comfortable Lifestyle:

A comfortable lifestyle, as outlined in the ASFA Retirement Standards Report, offers retirees a financially stress-free retirement with a more active lifestyle. It includes discretionary spending on leisure activities, domestic and international travel, dining out, and other non-essential expenses. The report provides retirement savings figures required to sustain a comfortable retirement lifestyle.

The ASFA report dives in depth into the estimated level of expenses the average retiree would have in retirement. You can explore this further on their website in their guide to “How much you spend in retirement”.

Based on these expenses, ASFA have given estimates on what income levels look like in a ‘modest’ and ‘comfortable’ retirement.

This should be used as a starting point for your retirement plans, not a completed estimate. For a comfortable lifestyle, you would expect to need $70,482 per year for a couple of $50,004 per year from your retirement savings. However, your lifestyle may be different. You may want to take a holiday or two each year, or go out to dinner more regularly. This is why it’s important to use these figures as a base, and adjust for your lifestyle.

How much do I need in retirement savings to retire?

Now that you have your income requirements for retirement, we need to solve for how much your will need in retirement savings to produce that income.

ASFA has done the numbers on this as well.

Table 2: Superannuation balances required to achieve a comfortable retirement

All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent. The fact that the same savings are required for both couples and singles reflects the impact of receiving the Age Pension.

Note: The lump sum estimates prepared by ASFA take into account the receipt of the Age Pension both immediately and into the future. The Age Pension is adjusted regularly by either the increase in the CPI or by a measure of wages growth, whichever is higher. The ASFA lump sum figures are therefore not updated quarterly

So how are you tracking for retirement?

If you would like to discuss your retirement goals and would want some assistance in figuring out how much retirement savings you will need, contact us via the website or by calling out office on 07 3378 9581 to arrange a meeting.