All of us have an imaginative and perceptive of our good retirement. However, whether or not it’s travelling across the country in a luxury motor home, taking part in golf every day or spending extra time with the grandkids, how much do you accumulate sufficiently to pay in your golden years?
How much do we need to live for retirement lifestyle?
Lifestyle is an individual choice. The big question is: How much does one need to save whilst working to pay the most preferred retirement lifestyle?
The first place to start is budgeting and calculating how much it’s essential to meet the basic living expenses. You may use your present expenses as a benchmark; however, remember that these could be quite different during retirement.
What about the age pension during retirement?
The government designs the age pension as a safety net for individuals who can’t self-fund their retirement. The age-pension retirement payment for a single person represents lower than 30% of ordinary male weekly earnings. A single retiree receiving the maximum basic rate for age pension will get $952.70 each fortnight, or $24,770 per year.
While a couple, if both members qualified to the full rate age pension, will get a combined amount of $1436.20 per fortnight, or $37,341 per year approximately.
The above may be sufficient to meet necessary essential expenses; however, most retirees wish to have a better and more active retirement lifestyle than their earlier generations. For these people, the age pension would not be adequate. Take this, for instance.
Living a modest lifestyle
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard furnishes an insight into the cost of different lifestyle choices. First set in 2004, it benchmarks every quarter the annual budget Australians must fund either a comfy or a modest standard of lifestyle in retirement.
The Standard defines a modest retirement lifestyle as “better than the age pension, but still only able to afford fairly basic activities”. The June 2020 The Association of Superannuation Funds of Australia (ASFA) figures propose that a single person would require $27,902 per year to accomplish this, while a couple would need a combined income of $40,380.
Upgrading to a comfortable retirement lifestyle
The Standard sets a comfortable retirement as one that allows “… 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“.
The Association of Superannuation Funds of Australia (ASFA) June 2020 figures advise that a single person would require $43,687 per year to have a comfortable retirement lifestyle, whereas a couple would need a combined amount of $61,909.
Without any doubt, these figures are only just a guide and vary from person to person, and the exact number required to fund your most preferred retirement lifestyle will rely on the options you make in regards to the things you wish to do. Your financial adviser can help you further accurately determine the extent you required in your retirement essentially based on your objectives, needs and preferences.
How much is enough to retire?
Examining the above figures shows that if you would like more fabulous than a basic lifestyle in retirement, you would require more than the age pension to live comfortable in the post-retirement phase. Your superannuation and non-superannuation investment savings might require to complement the gap, and in some circumstances, entirely fund your retirement.
The ASIC MoneySmart Retirement Planner calculator, out there at www.moneysmart.gov.au, is a helpful tool to get a basic idea.
The figures generated advice that to attain a comfortable retirement, a single person should have about $873,740, and a couple ought to have around $1,238,180.
These are nonexclusive calculations primarily based on a 5% return on investments. Your financial adviser can offer additional detailed analyses in your particular scenario.
What is the best way for retirement savings?
Superannuation is essentially the most favourable and tax-effective solution to save for retirement. You’ll be able to form your super through Superannuation Guarantee employer contributions (together with salary sacrifice), your non-concessional contributions, spouse contributions and government co-contributions.
There are certain limitations on superannuation contributions and withdrawals due to its sole-purpose, so that you may need to supplement your super with different investments such as managed funds, term-deposits or property. If you may wish more control over your superannuation assets, you can create your own superannuation, commonly known as Self Managed Super Fund (SMSF), with expert financial advice.
No matter how much you need, it’s essential to start planning early to ensure you have sufficient funds available to retire. We could work with you to create ways that fit your particular personal circumstances and make it easier to look ahead to having fun with your retirement dream.
The idea for calculation: worth is predicated on in the present day’s dollars and retiring at age 65. It doesn’t consider the Age Pension.
Age pension figures quoted embrace dietary supplements.