How much super do I need to retire?
No matter how close or far away it might be, you’ve probably had at least one dream about the day you can finish work and settle into retirement. But have you considered how much your dream retirement might cost, and at what age you might have enough to be able to give up the 9-5?
4 minute read
So just how much super do you need for retirement? And how can you find out if you’re on track? Let’s take a look below.
- There is no magic number when it comes to how much money you’ll need in retirement.
- It will depend on the lifestyle you want to lead and the number of years you intend to spend in retirement.
- You can get an idea of how much super you might need to retire by considering your expected costs, your life expectancy, your current super balance and other sources of retirement income.
How much super do I need to retire?
The truth is, the amount will be different for everyone. It all comes down to the lifestyle you want to lead in retirement, as well as other factors like what age you plan to retire, if you’ll have other sources of income, and how long you’ll live.
There are many different variables that will affect the figure, and all of these will be different for everyone. So, what works for your sister or your neighbour won’t necessarily be the same for you.
What sort of retirement are you dreaming of?
Before you start planning for retirement, including determining how much money you’ll need, it’s worth determining what sort of retirement you’d like.
What sort of lifestyle do you intend to lead when you stop working? Will you go out for dinner a few nights a week? How much will it cost to start that new hobby you’ve been planning? Do you want private health insurance, or will you be satisfied with the public system? Do you intend to travel within Australia and internationally? Have you factored in medical expenses, keeping in mind that your needs might be greater as you get older?
All of these factors will help determine what kind of retirement nest egg you need. You should also consider other expenses related to where you live – such as paying off your mortgage, ongoing rental expenses and potential renovations.
And then there’s your family, friends and other commitments. Will you be still supporting kids, spoiling grandkids, helping out friends, or contributing to charities or other causes close to your heart?
Consider your life expectancy
Given the average life expectancy for Australians is 80.9 for males and 85.0 for females (based on latest ABS data for the 2017-2019 reference period1), if you retire at age 65 you’ll spend roughly 20 years enjoying retirement!
Other income sources
You may have other sources of income in retirement , such as shares or other investments outside of super or an investment property. The income you receive from these sources should all be factored in when planning for how much super you’ll need in retirement.
The government age pension is another source of income to consider. Based on your assets and expected income, you may be eligible for full or part of the government’s age pension support. At the very least, you may be entitled to discounts on medical and health products and services.
What’s the difference between a modest and comfortable retirement?
According to ASFA, a ‘modest’ retirement lifestyle is better than what you could achieve on the age pension alone, but will still only cover quite simple activities, may mean you’ll rely on the public health system, only allow you to holiday close to home, etc.
A ‘comfortable’ retirement, as defined by ASFA2, will afford you a broader range of recreational activities including occasional travel, allow you to buy household goods as needed, and pay for private health insurance, a mid-range car and various electronic devices.
We encourage you to picture yourself in relation to one of our four retirement lifestyles, which we’ve broadly based on ASFA’s estimations. For more information on the types of things you’ll be able to do with the different retirement incomes, view our SunTracker brochure.
How do I calculate how much I will have in retirement?
It pays to plan ahead, and the sooner you get clear on where you stand and how you’re tracking towards retirement, the sooner you can work out if you need to make moves to boost your super so that you can live your dream retirement lifestyle.
That’s where we come in – at Australian Retirement Trust, we make it easy for you to take charge of your super with the right tools. Picture how your super balance is tracking for your retirement with our easy, online Retirement planner and calculator. As an Australian Retirement Trust member, you can also access expert financial advice about your Australian Retirement Trust account for no extra cost.3
1 Australian Bureau of Statistics, 2017-19.
2 Based on ASFA Retirement standard, 2018.
3 Australian Retirement Trust employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) which is wholly owned by Australian Retirement Trust.
Before joining Australian Retirement Trust, consider the potential loss of insurance and other benefits that you may have in your other funds. The information contained on this website is general information only and does not take into account your individual objectives, financial circumstances or needs. You should consider your own objectives, financial circumstances and needs, before making a decision about the financial product. Also, think about where your future employer contributions will be paid. You should consider the Product Disclosure Statement and Target Market Determination before deciding whether to acquire, or continue to hold the product. For more information or financial advice from Australian Retirement Trust, call us on 13 11 84.