How Much Super Will You Need to Retire Comfortably?


How much superannuation would you need to support a comfortable lifestyle during your retirement? Opinions about this vary widely and everyone has their own idea on how they want their retirement lifestyle to pan out. Some would want to maintain their current lifestyle and enjoy a comfortable retirement while some retirees will be scrooges, scrimping on every cost to ensure their Super lasts for as long as possible.

Retirement requires good planning. If you expect to live a particular kind of lifestyle long after you have stopped working, you need to begin thinking and planning about this as early as possible. Don’t wait until you are 55 to scramble some savings to cater for your retirement.

The first step is to start by working out the amount of money that you think you are going to need for your retirement. Then calculate the amount of superannuation that you think will be enough to cover your retirement expenses for the duration of your retirement. There are lots of tools and methods out there that can help you in estimating these. Your financial advisor will also come in handy in this, helping you do reasonable projections that give a clear picture of what you will need to assure a happy and comfortable retirement.

The Australian Securities and Investment Commission Calculations

The Australian Securities and Investment Commission (ASIC) has done some calculations on the amount of superannuation that you will need to live various kinds of lifestyle. For a “modest” lifestyle where the annual living costs amount $23, 032 on average, ASIC estimates you will need a lump sum of $300,000 in superannuation by the time you are 65.

If you wish to live a “comfortable” lifestyle where your annual living costs amount to $41, 830 on average, you will require a lump sum of $544,000 by the time you are 65 according to the ASIC estimate. For couples, the ideal lump sum would be $431,000 for a “modest” lifestyle and $744,000 for a “comfortable” lifestyle.

Association of Superannuation Funds of Australia (ASFA) Retirement Standard

The Association of Superannuation Funds of Australia has a Retirement Standard with even higher projections of the lump sum figures that will be required for a “comfortable” retirement. It puts the ideal figure for a single person at a lump sum of $430,000 and that of a couple at $500,000.

Of course these numbers will change when adjusted for the cost of living or inflation two or three decades from now. However, ASFA adjusts these figures four times every year in order to factor in the rise in prices of utilities and food. The Standard also factors in people’s changing spending habits and lifestyle expectations as well as the cost of everyday expenses such as health, travel, household goods and clothing.

If you are currently employed, you simply don’t have a choice about putting money in a Super. There are few options left. The Aged Pension is just a quarter of the average weekly pay in Australia and won’t even be enough to fund any retirement lifestyle choices.

To afford a fairly modest or comfortable lifestyle retirement, you simply have to begin making contributions to your super as early as possible. Talk to an accountant Melbourne expert to help you work out options that will maximize your superannuation.

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