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Tuesday, 24 April 2018 05:08

HOW MUCH DO I NEED TO RETIRE?

Written by Frank Marcaccio

Figuring out how much you need to retire needs honest answers to a few questions and then it takes a bit of planning.

A good starting point is to have an idea of what sort of lifestyle you would like in retirement.

The Association of Superannuation Funds of Australiaís (ASFA) Retirement Standard has researched some benchmark annual budgets that might give you some idea of what you could need for a ëcomfortableí or ëmodestí retirement lifestyle.

 A single person wanting a ëcomfortableí retirement, ASFA suggests an annual income of around $44,000, and for a couple, it gives a figure of almost $60,000.[i]

That amount of money might cover an annual holiday in Australia, eating out regularly at restaurants, regular participation in leisure activities and owning a reasonable car.

Itís all about what feels ìcomfortableî to you.

To meet this level annually, it is estimated that a single person might need around $545,000 in assets.

This amount could be made up of superannuation, shares, cash, and investment property.

Living a modest lifestyle in retirement could include a couple of short breaks each year near where you live, eating out infrequently at restaurants, trips to the cinema and some paid leisure activities as well as owning an older car.

According to ASFA the assets needed to support that would be around $ $24,250 per annum.

The figures for both lifestyles assume that the retirees own their own home outright.

The next question you need to answer is when you want to retire and, this is a tricky one, how long you are going to live.

Life expectancies are increasing and most people are retired longer than they expect. While your genes and health may influence your life span, it is a good idea to plan to live into your nineties or even older.

Once you know how much money you'll need each year in retirement, there are several things to consider when looking at how to achieve your goals:

  • when you want to retire and how long your income needs to last
  • your tolerance to investment risk
  • whether you may be eligible for Government assistance
  • other assets, and any lump sum withdrawals you are planning to take from your super

If you need help planning or getting your super on track to your ideal retirement ëlifestyleí goals, a chat with a financial planner can put you on the right path.


[i] The Association of Superannuation Funds of Australia Limited (ASFA). (2018). ASFA Retirement Standard. Sydney.

 

This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.
More in this category: « 5 EASY WAYS TO GROW YOUR SUPER

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