Home » E-News » News

Categories

Accountant Aged Care Allied Health Annuity Asset Finance Asset Planning Asset Protection Asset Protection Strategies Assets Assets and Risks Ato Bas Binding Death Benefit Nominations Binding Financial Agreement Bonds Brexit Budget Budgeting Business Business Registrations Business Support Business Tax Deduction Business Value Capital Gains Tax Capital Protection Catherine Frost Cgt Checklists Commercial Property Community Corporate Trustee Cryptocurrency Death Benefit Nomination Debt Debtors Deceased Estate Depreciation Director Director Id Divorce Economic Update Economy Emily Kermac Employees Estate Planning Executor Fbt Federal Budget Finance Finances Financial Advice Financial Plan Financial Update Franking Credits Government Grants Gst Home Office Hybrid Unit Trust Individual Ownership Information Session Insolvency Insurance Interest Rates Investment Loan Investment Loans Investment Property Investments Janet Kohan Jobkeeper Jobmaker Joint Ownership Ken Burk Land Tax Lending Market Update Mortgage Broking Mygov Negative Gearing Overseas Gifts Parental Leave Paris Financial Pat Mannix Payg Payg Variation Pension Practice Practice Valuations Private Wealth Property Rebecca Mackie Record Keeping Research & Development Retirement Retirement Planning Retirement Savings Salary Sacrifice Scams Self Managed Superannuation Self Managed Superannuation Fund Self Managed Superannuation Fund Borrowing Shares Small Business Smsf Smsf Borrowing Smsf Self Managed Superannuation Fund Strategic Business Structuring Structures Succession Plan Superannuation Superannuation Fund Tax Tax Benefits for Super Tax Concession Tax Deduction Tax Losses Tax Offset Tax Planning Tax Savings Temporary Full Expensing Tenants in Common Tfe Training Trust Trusts Will Working from Home

How much do I need in retirement?

How much do I need in retirement?

How much you need to save for a comfortable retirement is a question many of us ask.

While we all hope for a simple answer, how much money you need in retirement differs for everyone. Additionally, a comfortable retirement is based on a whole range of factors including:

  • When you retire
  • How long you’ll spend in retirement
  • Whether you’ll sell assets to fund your lifestyle
  • How your assets are invested.

There are a number of guides that are useful to consider when working out how much you need to save for your retirement.

A modest or comfortable retirement

The ASFA Retirement Standard is published each quarter by the Association of Superannuation Funds of Australia (ASFA). It provides approximate figures for the level of income required for a modest or comfortable lifestyle, assuming you own your own home.

The current ASFA comfortable lifestyle standard is $45,962 per annum for a single person and $64,771 per annum for a couple, while the modest lifestyle standard is $29,139 for a single and $41,929 for a couple respectively.

A modest retirement lifestyle assumes you are able to afford basic activities. A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broader range of leisure and recreational activities and to have a good standard of living. You should be able to afford to buy household goods, private health insurance, a reasonable car, good clothes, electronic equipment and to travel overseas and in Australia.

Determining what you need as a lump sum

It’s also useful to understand how much money you need to live a modest or comfortable retirement as a lump sum.

ASFA estimates that the lump sum needed at retirement to support a comfortable lifestyle is $640,000 for a couple and $545,000 for a single person. This assumes a partial Age Pension.

A different approach is to look at your pre-retirement income and consider how much of it you will need in retirement. Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.

Another method to calculate a lump sum

Another method is to take your current annual expenses and multiply this amount by the number of years that represent the difference between the age you retire and average life expectancy to calculate the lump sum you may require in retirement.

In Australia, average life expectancy is 83.5 years. If you take the $32,500 figure and assume you retire at age 65, this would equate to a lump sum target of $601,250. This is a guide only. Keep in mind the investment returns you generate and your actual expenses in retirement will impact the amount you need to fund your retirement.

No matter how much you assume you need, the more time you have to plan, the greater your chances of achieving your retirement income goal.

There are many steps you can take to help you achieve your retirement savings goal. First, understand your current financial position including your income and expenses, what you own and what you owe.

You may consider strengthening your financial position by repaying debt, building up your savings and investments or making additional contributions to super. Start considering how best to use your financial resources to support your income needs in retirement. Make sure you monitor your plan on an ongoing basis.

The idea is to make the most of the retirement planning opportunities available to you. And remember you don’t have to go it alone. Seeking financial advice can help you achieve the retirement you hope to achieve.

 

Source: BT


Tags: Private Wealth | Retirement |