Planning Superannuation – How much will I need?

We'd love you to share this!
Share on Facebook
Facebook
Pin on Pinterest
Pinterest
Tweet about this on Twitter
Twitter
Print this page
Print
Email this to someone
email

 

People are living longer and longer with recent advances of medicine. Our current life expectancies are 86 years (for men) and 89 (for women), and they’re only expected to rise. This is great news, and gives people a lot more time near the later years in life to make plans for travelling, connecting with family, and taking up hobbies. Retirement is something many of us look forward to, and is certainly something that takes up a significant portion of our lives (almost a quarter of our lives according to current life expectancies).

That being said, we can’t have a talk about retirement without talking about the funds to help fuel it, your superannuation. A lot of people look forward to receiving superannuation, but don’t plan far enough ahead for it (in terms of considering how much they will need to live comfortably).

While this depends on your lifestyle to some extent, every one is going to need a certain basic amount to cover the costs of living. The Association of Superannuation Funds of Australia’s Retirement Standard has suggested that this amount will vary depending on whether you’re on your own (in which case you’d need about $430,000) or whether you’re still with your partner (in which case you’d likely need more, approximately $500,000). These estimates are based on current costs of living, and are regularly updated to reflect costs of communication, travel, groceries, and utilities.

To make it easy to understand and use, the ASFA has released a table of information (listed below), and created a tool to calculate your individual retirement estimate.

The information that the Association of Superannuation Funds of Australia’s Retirement Standard has released is published below in the form of a quick-reference guide.

 

  Comfortable retirement Modest retirement Age Pension
Single $42,597 a year $23,489 a year $21,913 a year
Couple $58,326 a year $33,784 a year $33,036 a year
One annual holiday in Australia. One or two short breaks in Australia near where you live each year Even shorter breaks or day trips in your own city
Regularly eat out at restaurants. Good range and quality of food Infrequently eat out at restaurants that have cheap food. Cheaper and less food than a ‘comfortable’ lifestyle standard Only club special meals or inexpensive takeaway
Owning a reasonable car Owning an older, less reliable car No car or, if you have a car, it will be a struggle to afford repairs
Afford bottled wine Afford cask wine Home brew beer or no alcohol at all
Good clothes Reasonable clothes Basic clothes
Afford regular hair cuts at a good hairdresser Afford regular hair cuts only at a basic salon or pensioner special day Less frequent hair cuts or getting a friend to cut your hair
Take part in a range of regular leisure activities Take part in one paid leisure activity infrequently. Some trips to the cinema Only taking part in no cost or very low cost leisure activities. Rare trips to the cinema
A range of electronic equipment Not much scope to run air conditioner Less heating in winter
Replace kitchen and bathroom over 20 years No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom No budget to fix home problems like a leaky roof
Private health insurance Private health insurance No private health insurance

 

On top of tools that help estimate your needs, there are plenty of resources available to help you start your superannuation savings.