If you asked a room full of people what the magic figure is that they need to comfortably retire, you would probably get a different figure from everyone!
A ‘comfortable retirement’ looks different to everyone.
Some people want to do lots of travelling or spend more time with family and friends in their retirement. Others need to pay off their mortgage, do home renovations, buy a new car or take up a new hobby.
A comfortable retirement also depends on what age you want to retire at, your health and how long you will live.
How Much Will You Need?
According to The Association of Superannuation Funds of Australia’s (ASFA) latest report, to support a comfortable lifestyle, you will need savings of $640,000 as a couple or $545,000 for a single person. This equates to roughly $60,000 a year for a couple or roughly $44,000 a year for a single person.
Compare this to the Age Pension of $35,022 a year for a couple or $23,231 a year for a single person.
Use a Retirement Calculator.
It doesn’t matter how old you are or how much money you have now, in order to plan for the future it is best to start right now!
ASIC’s MoneySmart website has a calculator to help you work out what your annual income in retirement will be based on your current income, superannuation and desired retirement age. Try it out now!
Where will my income come from in retirement?
Most retirees get their income from a few sources, so don’t worry if your superannuation balance alone won’t support the magic ‘comfortable retirement’ figure of $60,000 a year for couples ($44,000 for singles). These other sources may include:
- Selling the family home / downsizing – realistically you need to be debt free before you retire
- Part-time employment or work in your own business – we are living longer these days and most people are choosing to stay in the work force to help fund their retirement. Once you reach the age pension, a couple can earn up to $28,974 each without paying any income tax (singles $32,279).
- Age pension – the majority of Australians will rely on the government age pension in retirement to some degree
It’s never too early to start planning for your retirement!