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How much money do I need to retire?

At some point you will retire. It’s never to early to start wondering, “How much money do I really need to retire?”

We hope that we can retire with enough life left in us to enjoy all the things that took a backseat during our working years. We want enough money to be comfortable and safe in the knowledge we won’t run out of money and have to go back to work, unless of course we want to.

With all this in mind, you should place a dollar figure on how much you need to save now to retire comfortably. That number is your individual number as it will be based on your:

individual circumstances
where and how you want to live
your assets and debts
whether you have dependants or not and
the type of lifestyle you live.

It will also change based on the type of investments you hold and the returns on your investments. You can look at the ‘Retirement Standard’ guide by the Association of Superannuation Funds of Australia (ASFA) for a guideline on how much you might need, but if you want to get a more accurate figure, we can help you work it out.

A couple of about 65 years of age – $40,194pa is needed to live modestly.
A couple of about 65 years of age – $61,786pa is needed to live comfortably.
For singles of about 65 years of age – $27,913pa is needed to live modestly.
For singles of about 65 years of age – $43,787pa is needed to live comfortably. *

The ASFA considers that for those with good health who own their own home, a comfortable lifestyle includes owning decent household goods, private health insurance, nice clothes, a decent car, a meal out a couple of times a week, and semi-regular travel. This all sounds quite reasonable, but there are a lot more expenses to consider in retirement such as regular paid activities and social outings, increased medical expenses and unpaid work you may do such as looking after grandchildren and the expenses associated with them.

What about the age pension?

For those eligible for the age pension, the full age pension for singles is $24,268pa which is nearly enough to live a modest lifestyle. For couples it is $36,582pa which is a bit short of a modest lifestyle so you would need other income to top this up.

What’s this as a lump sum?

An independent superannuation resource has calculated a lump sum you might need to have set aside the day you retire in order to live a basic or comfortable lifestyle in retirement. The website demonstrates the different amounts needed based on the investment rate of these lump sums and whether or not you are receiving the age pension.

What does it all mean?

If you are coupled up and you want to retire at around 65 years old and dream of having a comfortable lifestyle, you will need to invest about $1.28 million dollars to live off the investment’s return. This is assuming you have an average return of 5% per annum and you don’t want to draw down from the $1.28 million dollars.

All of this can take a bit of time and energy to work out, but it is nice to have a magic number to work towards and to know that when your money is invested and you are working with a professional financial adviser who understands how it all works, you should have enough to last through your retirement.

With this information and a renewed energy to get your super on track, get in touch with us today. We can help ensure you have enough in retirement.

How much money do I need to retire?

Michael Luck

What about the age pension?

What’s this as a lump sum?

What does it all mean?

**Figures are approximate and assume the individual will be retired for 25 years. More information can be found on www.superguide.com.au*

www.superannuation.asn.au

www.humanservices.gov.au

www.superguide.com.au