How much super do I need to retire on?

How much super do I need to retire on?

A very common question we get asked is: how much superannuation is needed in retirement to meet my living costs and lifestyle?

According to ASFA (The Association of Superannuation Funds of Australia) Retirement Standard benchmark there are two main retirement lifestyles – Modest and Comfortable.

ASFA suggest a ‘Modest Lifestyle’ is considered better than the Centrelink Age Pension, but still only able to afford fairly basic activities. They consider a ‘Comfortable Lifestyle’ to enable a retiree to be involved in a broad range of leisure and recreational activities and have a good standard of living through the purchase of household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, domestic and occasionally international travel.

Assuming both Lifestyles own their home outright and are relatively healthy, ASFA calculates the respective budget for those aged around 65.

Modest LifestyleComfortable Lifestyle
SingleCoupleSingleCouple
Total per year$28,220$40,719$44,183$62,435

In order to generate the required income to meet these budgeted amounts, ASFA projects the following superannuation balances will be needed:

Modest LifestyleComfortable Lifestyle
SingleCoupleSingleCouple
Super Balance $70,000$70,000$545,000$640,000

The lump sums required for a ‘Comfortable’ retirement assume that the retirees will drawdown all of their capital and receive a part Centrelink Age Pension entitlement. The lump sums needed for a ‘Modest’ retirement are relatively low due to the base rate of the Centrelink Age Pension (Inc. Supplements) is sufficient to meet much of the expenditure required at this budget level.

While this ASFA benchmark is particularly  useful – every families cost will be different, these statistics include a number of assumptions and takes a national view. More information on ASFA’s underlying assumptions which form these projections can be found on their website: www.superannuation.asn.au

We understand objectives the costs for people living in regional areas vary to people living in metropolitan areas. Our job is to help identify your personal lifestyle objectives and specific costs to help determine what income you or your family require. We then help construct a budget and build wealth towards meeting your retirement living costs long term.