The amount you might need in super to retire depends on the type of lifestyle you plan to live post retirement.
As per studies conducted by the Australian Institute of Health and Welfare, the average life expectancy of males and females born in Australia have increased over the years to an average life expectancy of 80 years for males, and 85 years for females. The growing trend of increases in life expectancy means that more savings is likely to be required at retirement in the future, therefore highlighting the importance of sound financial planning.
Although there is no direct answer on how much savings is required at retirement, the Australian Financial Security Authority (AFSA) provides a benchmark of how much singles and couples need to save to support their chosen lifestyle.
|Households||Modest Lifestyle||Comfortable Lifestyle|
|Single||$27,902 a year||$43,687 a year|
|Couple||$40,380 a year||$61,909 a year|
A modest retirement lifestyle is considered as only being able to afford fairly basic activities. A comfortable retirement lifestyle considers the 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 such as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and occasionally holiday travel.
ASFA estimates that $545,000 ($640,000 for couples) in super at retirement will provide enough for a comfortable lifestyle, and $70,000 will provide for a moderate lifestyle. Both calculations assume that retirees will also receive a full or part pension to supplement their super.
It is also important to remember that for most people, their home is their biggest asset and so they can always use this to downsize in the future for income needs as well.
Author: Jesper Lim