How much super should I have to retire?

How much super should I have to retire?

When it comes to estimating how much you’ll need for a comfortable retirement, you have a few things to think about. These things can include —

• How soon do you want to retire?
• How long do you want to be retired?
• What’s your current lifestyle like?
• What do you have planned for your future?


The next part is estimating how much you’ll have when you eventually retire. Some of the determining factors may include —

• How much are you earning as an employee (or business owner) now?
• Are you currently making personal super contributions?
• What’s your current superannuation balance?
• Do you have assets and what is the sum total of these assets?


A comfortable lifestyle versus a modest lifestyle

For a long time, most Australians have used a million dollars as an ideal amount of money to retire on. Realistically speaking, retiring on this amount is not possible for the majority of Australians.

According to the Association of Superannuation Funds of Australia (ASFA), Australians around the age of 65 who own a home and are in relatively good health will need the following amount of money each week and year in retirement.


ASFA Retirement Standard

Single

Comfortable lifestyle
$862 per week   $44,818 per year

Modest lifestyle
$548 per week   $28,214 per year


Couple

Comfortable lifestyle
$1,218 per week   $63,352 per year

Modest lifestyle
$792 per week   $41,170 per year


As defined by ASFA a comfortable retirement lifestyle —

" enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.¹"

ASFA defines a modest retirement lifestyle as —

"a lifestyle considered better than the Age Pension, but still only allows for the basics.¹"



How much do I actually need to retire and live the lifestyle I want?

The kind of lifestyle you want in retirement is entirely up to you. Everyone has different needs and requirements. And every person is in a different financial situation.

Whatever your situation, following ASIC MoneySmart’s rule of thumb may be helpful. The rule of thumb is —

If you own your own home, you'll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement.2

If you’re happy to live more modestly, you may not need as much as this rule of thumb requires.

How much do I actually need to retire and live the lifestyle I want?
How much do I actually need to retire and live the lifestyle I want?



But if this is something you want to work towards or if you want to work towards an even better lifestyle, you’re going to need to think about:

Do I need to work more?

Do I need to earn more?

Do I need to save more?

If these questions are currently on your mind, you may want to get in touch with a financial planner to help you take control of your financial future.

For more information about financial planning, scroll to the bottom of this page.

 

Sources of income to fund life in retirement

As you get closer to retirement age, you’ll need to start thinking about the various sources of income you can use to fund your life in retirement.

These can include:

  • The super you’ve accumulated over the years is going to play a key role in your retirement.

    If you’re getting closer to retirement age but not sure if you’re financially ready, make it your mission to find out exactly how much super you’ve accumulated.

    From there, you can use our super calculators to estimate where that balance is going to be at the point at which you want to retire.

    If it’s not where you want it to be, you may want to consider salary sacrificing or making personal after tax contributions.3

    These contributions could give your super a boost and set you up for a more comfortable post-work life.

  • This would be the money you’ve earned from working and put aside after expenses over a lengthy period of time.

    If you have an excess of savings set aside (in a bank account or a term deposit), you may want to consider using it to make an after-tax contribution to your super. 3

    This could give your super a boost to set you up for a more comfy post-work life.

  • If you’ve bought shares over the years, the market value of those shares may have risen. If this is the case, you may make a healthy profit from them.

    If you’ve invested in a home, you may want to sell your home for a healthy capital gain and then consider a downsizer contribution.3

  • If you have a lower amount of super, the Commonwealth Government offers the Age Pension as an income supplement.

    If you can meet the Commonwealth Government’s minimum requirements, you may be eligible for the Age Pension.


Need help getting ready for retirement?

It’s okay if you do.

Not everyone is an expert with money. Trying to work out what you’ll need at the point at which you want to stop working by yourself can be particularly tricky.

If you’re not sure if you have enough to retire, you may want to speak with a financial adviser.

At Super SA, we encourage you to seek professional financial advice on your financial planning needs.

You can choose your own financial planner through Financial Planning Association of Australia or you can take advantage of the service available through Industry Fund Services. The financial planners at IFS can advise you about the options available to SA public sector employees.

If you would like to learn more about financial planning, or to make an appointment with an IFS planner, please call the Super SA Advice Administration team on 1300 162 348.

If you need help making contributions (salary sacrifice or personal after tax) or information on Early Access to Super (EATS) and/or Transition to Retirement (TTR), you can call the Member Services team on 1300 369 315.


1 https://www.superannuation.asn.au/resources/retirement-standard
2 https://moneysmart.gov.au/grow-your-super/how-much-super-you-need

3 You should seek financial advice before making any decision about your super or investment objectives.

Want to learn more about retirement planning?

Are you thinking about retirement? Whether the big day’s five years or one year away, it’s time to take action to get yourself on the right track for a well-planned, comfortable future.

The information shown on this website is general information only. We haven’t considered your needs or objectives when providing the information. You should assess your own financial situation and needs and read the relevant Product Disclosure Statement before deciding about products on this website.

Super SA has engaged Industry Fund Services (IFS) (ABN 54 007 016 195 AFSL No. 232514) to facilitate the provision of limited scope and comprehensive financial advice to members of the superannuation schemes administered by Super SA. Advice is provided by financial planners who are Representatives of IFS. Fees may apply. Further information about the services can be found in the relevant IFS Financial Services Guide, a copy of which is available from your IFS financial planner or by calling Super SA on 1300 162 348. IFS is responsible for any advice given by its Representatives. Super SA does not recommend, endorse or accept responsibility for products or services or products provided or recommended by third-party organisations, including IFS. Super SA does not accept liability for any loss or damage caused by the products and services or products provided or recommended by IFS.

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