Get your Free Financial Fitness score and personalised report

How much do I need to retire?

Eclipse

It's no exaggeration to say, for many working Australians, retirement is always at the back of the mind. Having solid retirement savings in place is key to being able to enjoy the Golden Years in comfort and health. 

Before you can achieve that goal, however, you have to know what your target is.

How much do I need?

It depends. The Association of Superannuation Funds of Australia (ASFA) puts out an quarterly retirement standard that outlines the different costs of retirement according to lifestyle and whether or not an individual gets married. 

What are the different lifestyles?

The ASFA lists only two: Comfortable and modest. Under its stipulations, modest is considered better than the Age Pension, but still relatively limited – it aims to cover basic expenses and activities. A comfortable lifestyle, by contrast, is defined as one where a healthy individual enjoys a good standard of living. This includes buying quality consumer goods and being able to travel – and is involved in a range of leisure activities. 

How much do the two cost?

It's broken down by whether or not you're in a relationship. Per year, a modest income:

  • for a single person is $23,489
  • for a couple is $33,784

Meanwhile, a comfortable income per year is: 

  • $42,597 for a single person
  • $58,326 for a couple

How much is that as a lump sum?

This is where it gets tricky, because it depends. There are a number of factors that can impact the total amount you need to retire. The life expectancy for a man and woman born in 1965-67 are 67.6 and 74.2 years respectively, according to the Australian Bureau of Statistics.

However, if you planned for this duration of life, your retirement savings could well fall short – it's only an average after all. That figure takes into account the duration of life for anyone born in that year – those who are 49 years old today, for instance, have a much longer life expectancy than originally projected. 

There's also the fact of rising living costs, which could push these figures higher by the time you're ready to call it a day, as well as inflation and returns. Finally, your eligibility for the Age Pension can also affect how much you'll need. 

Is it possible to come up with a figure at all?

It's possible to come up with an approximate figure that will at least give you an idea of what to aim for. Let's assume, for instance, that you're aiming for a comfortable retirement income of $58,326 per year for an 18-year long retirement. You're earning an 8 per cent return, with an inflation rate of 3 per cent. 

You would need a starting lump sum of a little over $700,000, which would erode to nil over that time period. You might need even more even if you're still 10-20 years away from retirement, due to inflation. 

Airlie Beach
07 4946 7359
Suite 2
Conway House
6 Island Drive
Cannonvale, 4802
Gold Coast
1300 857 359
Suite 8
2 Fortune Street
Coomera
Queensland, 4209
Brisbane
1300 857 359
310 Edward Street
Brisbane
Queensland, 4000
Prosperine
07 4945 5349
Level 1
Federation House
20 Chapman Street
Prosperine, 4800
Eclipse Financial Services Pty Ltd | ta Eclipse Financial Services | ABN 47 106 053 249 | Corporate Authorised Representative No 422806 of Professional Investment Services Pty Ltd | ABN 11 074 608 558 | Aust Financial Services License 234951
www.profinvest.com.au
The Fine Print| Contact Us| Financial Services Guide| Complaints| Privacy Policy