Once you understand the amount of super you’re entitled to receive from your employer as a Super Guarantee contribution, the obvious next step is to think about how much you need to have in your super savings to make your retirement dreams a reality.
If you’re hoping to travel around the world, or around Australia, or just looking forward to indulging some hobbies and hanging out in the garden – how much money is enough?
According to the ‘Retirement Standard’# from the Association of Superannuation Funds of Australia (ASFA), a single person will need $545,000 in retirement savings to have a ‘comfortable’ retirement, and couples will need $640,000. A quick search online will see that those estimates range greatly, and depends on what you consider to be ‘comfortable’ and a whole bunch of variables like when you retire, interest rates, inflation, the actual cost of living, and an estimate of how long you’ll need your retirement savings to last. The Retirement Standard is updated four times a year to take into account some of these changes.
The table below will give you a guide to the amount you may need each year and what is included in the estimate.
|Comfortable retirement||Modest retirement||Age Pension|
|Single||$43,665 a year||$24,250 a year||$20,721 a year *|
|Couple||$59,971 a year||$34,855 a year||$31,238 a year *|
|One annual holiday in Australia||One or two short breaks in Australia near where you live each year||Even shorter breaks or day trips in your own city|
|Regularly eat out at restaurants. Good range and quality of food||Eat out less often and at restaurants that have cheaper food than a ‘comfortable’ lifestyle standard||Only club special meals or inexpensive takeaway|
|Owning a reasonable car||Owning an older, less reliable car||No car or, if you have a car, you may struggle to afford repairs|
|Afford bottled wine||Afford cask wine||No alcohol at all or cheap solutions|
|Good clothes||Reasonable clothes||Basic clothes|
|Afford regular haircuts at a good hairdresser||Afford regular haircuts at a basic salon or pensioner special day||Less frequent haircuts or getting a friend to cut your hair|
|Take part in a range of regular leisure activities||Take part in one paid leisure activity infrequently. Some trips to the cinema||Only taking part in no cost or very low cost leisure activities. Rare trips to the cinema|
|A range of electronic equipment||Not much scope to run air conditioner||Less heating in winter|
|Replace kitchen and bathroom over 20 years||No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom||No budget to fix home problems like a leaky roof|
|Private health insurance||Private health insurance||No private health insurance|
* Base rate before payment of supplements. Figures from March Quarter 2017.
You can visit ASFA’s Super Guru website for more useful information on the Retirement Standard and how to calculate your own ‘nest egg’ target.
If you want to work out whether you’re on track, or what your options are to improve your position, that’s where advice from a Super Adviser could help. Simply contact us for more information.