How much super should I have to retire?
How much super should I have to retire?
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When it comes to estimating how much you’ll need for a comfortable retirement, you have a few things to think about. These things can include —
• What do you have planned for your future?
The next part is estimating how much you’ll have when you eventually retire. Some of the determining factors may include —
• Are you currently making personal super contributions?
• What’s your current superannuation balance?
• Do you have assets and what is the sum total of these assets?
A comfortable lifestyle versus a modest lifestyle
For a long time, most Australians have used a million dollars as an ideal amount of money to retire on. Realistically speaking, retiring on this amount is not possible for the majority of Australians.
According to the Association of Superannuation Funds of Australia (ASFA), Australians around the age of 65 who own a home and are in relatively good health will need the following amount of money each week and year in retirement.
ASFA Retirement Standard
| Comfortable lifestyle | |
| $961.62 per week | $50,004 per year |
| Modest lifestyle | |
| $611.25 per week | $31,785 per year |
| Comfortable lifestyle | |
| $1,355.42 per week | $70,482 per year |
| Modest lifestyle | |
| $880.92 per week | $45,808 per year |
As defined by ASFA a comfortable retirement lifestyle —
" enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.¹"
ASFA defines a modest retirement lifestyle as —
"a lifestyle considered better than the Age Pension, but still only allows for the basics.¹"
How much do I actually need to retire and live the lifestyle I want?
The kind of lifestyle you want in retirement is entirely up to you. Everyone has different needs and requirements. And every person is in a different financial situation.
Whatever your situation, following ASIC MoneySmart’s rule of thumb may be helpful. The rule of thumb is —
If you own your own home, you'll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement.2
If you’re happy to live more modestly, you may not need as much as this rule of thumb requires.
But if this is something you want to work towards or if you want to work towards an even better lifestyle, you’re going to need to think about:
- Do I need to work more?
- Do I need to earn more?
- Do I need to save more?
If these questions are currently on your mind, you may want to get in touch with a financial planner to help you take control of your financial future. For more information about financial planning, please click here to learn more.
Sources of income to fund life in retirement
As you get closer to retirement age, you’ll need to start thinking about the various sources of income you can use to fund your life in retirement.
These can include:
-
Your superannuation
The super you’ve accumulated over the years is going to play a key role in your retirement.
If you’re getting closer to retirement age but not sure if you’re financially ready, make it your mission to find out exactly how much super you’ve accumulated.
From there, you can use our super calculators to estimate where that balance is going to be at the point at which you want to retire.
If it’s not where you want it to be, you may want to consider salary sacrificing or making personal after tax contributions.3
These contributions could give your super a boost and set you up for a more comfortable post-work life.
-
Your savings
This would be the money you’ve earned from working and put aside after expenses over a lengthy period of time.
If you have an excess of savings set aside (in a bank account or a term deposit), you may want to consider using it to make an after-tax contribution to your super. 3
This could give your super a boost to set you up for a more comfy post-work life.
-
Your investments
If you’ve bought shares over the years, the market value of those shares may have risen. If this is the case, you may make a healthy profit from them.
If you’ve invested in a home, you may want to sell your home for a healthy capital gain and then consider a downsizer contribution.3
-
The age pension
If you have a lower amount of super, the Commonwealth Government offers the Age Pension as an income supplement.
If you can meet the Commonwealth Government’s minimum requirements, you may be eligible for the Age Pension.
Need help getting ready for retirement?
It’s okay if you do.
Not everyone is an expert with money. Trying to work out what you’ll need at the point at which you want to stop working by yourself can be particularly tricky.
If you’re not sure if you have enough to retire, you may want to speak with a financial adviser.
At Super SA, we encourage you to seek professional financial advice on your financial planning needs.
You can choose your own financial planner through Financial Advice Association Australia or you can take advantage of the service available through Industry Fund Services. The financial planners at IFS can advise you about the options available to SA public sector employees.
If you would like to learn more about financial planning, or to make an appointment with an IFS planner, please call the Super SA Advice Administration team on 1300 162 348.
If you need help making contributions (salary sacrifice or personal after tax) or information on Transition to Retirement (TTR), you can call the Member Services team on (08) 8214 7800.
Want to learn more about retirement planning?
Are you thinking about retirement? Whether the big day’s five years or one year away, it’s time to take action to get yourself on the right track for a well-planned, comfortable future.
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2 https://moneysmart.gov.au/grow-your-super/how-much-super-you-need
3 You should seek financial advice before making any decision about your super or investment objectives.