SuperGuide
Superannuation and retirement planning information
A million dollars is often cited as the gold standard of retirement savings. It certainly sounds like a lot of money, but it may not provide the income you require if you are a couple or if one of you has high healthcare needs.
How much will $3.4m in super generate in retirement income for a couple across 25, 30 or 25 years?
A million dollars is often bandied about as the gold standard of retirement savings. It certainly sounds like a lot of money, but is it enough to retire on not just comfortably but in style?
Since 1 July 2017 there has been a limit on the amount you can transfer into a super account in pension phase. The question is, is this an arbitrary figure dreamed up by bureaucrats or is it enough for a dream retirement?
According to the ASFA Retirement Standard, a couple can live a ‘comfortable lifestyle’ with a retirement balance of $640,000 while singles can enjoy the same with $545,000. But these are guidelines only.
A million dollars is often talked about as the gold standard of retirement savings, but it is a suspiciously round number. Depending on your personal circumstances, you might live well on much less, say $750,000, especially if you are not a big traveller or you intend to continue working well into your 70s.
Recently there have been advances in the way retirement calculators are being designed, meaning that users are no longer required to assume how long they are going to live or what investment returns will be.
The widely-reported ASFA Retirement standard suggests couples can enjoy a ‘comfortable lifestyle’ on just over $60,000 a year while singles can do the same on around $43,000. If that sounds less than comfortable to you, perhaps an income of $100,000 a year is closer to the mark.
So, you’ve done some preliminary sums and think you will need around $80,000 a year to live well in retirement. The ASFA Retirement standard suggests couples can enjoy a ‘comfortable lifestyle’ on around $60,000 a year and singles on about $43,000 a year. By this yardstick, $80,000 a year should support a more than comfortable retirement.
If $60,000 a year sounds like your kind of retirement, the next step is to work out how much super you will need to fund it.
If $50,000 a year sounds like your kind of retirement, the next step is to work out how much super you will need to fund it.
If $40,000 a year sounds like your kind of retirement, the next step is to work out how much super you will need to fund it.
The amount of super YOU need to retire will depend on your personal circumstances, financial resources both inside and outside super and your lifestyle. So before you set an arbitrary super target, block out the fearmongers and think about the big picture.
Saving for retirement isn’t a competition, but it’s good to know if you’re falling behind people your own age and if you need to contribute a bit more.
Knowing what and where you will spend will make retirement planning much easier, and help you avoid retirees’ biggest fear: outliving their savings.
