How much super do I need?
If everything goes to plan, one day you’ll put your feet up and call yourself retired. But you can’t take this eventual paradise of downtime and relaxation for granted. For everything to go to plan, first you need to have a strategy based on how much money and super you think you’ll need.
The number one goal of your plan, of course, is having ‘enough’ money for a ‘comfortable’ retirement. But there’s a lot of required information in that sentence: how much is enough? What exactly is ‘comfortable’? Some recent reports have said Aussie retirees will need $1 million for a comfy retirement – and that’s very much not going to be possible on the age pension alone.
So the question is: How much super is enough?
Naturally, ‘enough’ is going to depend on the retiree’s plans. For instance, annual round-the-world, five-star cruises are not everybody’s cup of tea – but they are a dream that many hard-working Australians are working towards.
So the important question here is standard of living.
The good news is that, pretty much across the board, retirement is actually a less expensive period than your working life, especially if you achieve your homeownership dream and enjoy good health.
The Association of Superannuation Funds of Australia (ASFA) calculates that a ‘modest’ retirement will cost a couple just over $34,000 a year, rising to almost $60,000 for a ‘comfortable’ standard of living. That’s almost double the amount paid by the age pension.
Basically, a ‘modest’ retirement is a better standard of living and can be enjoyed on the pension alone, while ‘comfortable’ means that the retiree can run a good car, eat out and travel regularly, have good furniture and enjoy all of the things they like without worrying too much about money.
So while you may want $1 million for retirement, you don’t necessarily need it. For instance, a study by Investment Trends found that retirees with just $30,000 a year – a long way from that magic million – reported having ‘a little left over’ in their pockets, even if it came from combining super with the pension.
But those people on a retirement income of $25,000 – a tad more than the pension – reported that their standard of living was being stretched. However, a $60,000 a year income isn’t always necessary for being ‘comfortable’, as some reported feeling just that – comfortable – on $40,000.
In short, while that magic million dollar retirement might actually be a myth, the best way to make sure you get to your retirement age without much concern is planning and getting the best advice in early stages and receiving the support from a super fund which its priority is to generate the rewards you deserve for your hard work.
Contact Nationwide Super today to find out more about how we can help you to achieve your and your employees’ retirement goals.