How much will you need?

February 23 2019
Some financial advisers suggest a common target for retirement income is around 60% of your salary at retirement.

SET YOUR RETIREMENT OBJECTIVES

Working out how much money you'll need in retirement can be challenging. It's important that you understand your retirement objectives. Working out the lifestyle you want will give you an idea of how much you'll need each year.

IMG_News_David_Sml A Senior Financial Adviser with ESSSuper, says it is very difficult to generalise about the amount of money people need at any age. 1

 

"Budgeting is such an individual process. We see members who can live very comfortably on the age pension while others feel they need much more than this for a comfortable life. 'How much do you need', is one of the first questions we ask any member who comes to see us and it is something everyone needs to work out as an individual or couple."

"We recommend you complete a budget before you retire to determine your needs. A good place to start is the Budget Planner on the MoneySmart website."

MoneySmart Budget Planner2

A complete budget can help you determine your income needs in retirement

Budget Planner

What lump sum do I need?

To give you an idea, The Association of Superannuation Funds of Australia (ASFA) has estimated how much you'll need, as a lump sum, to live a 'comfortable' lifestyle.

ASFA estimates that a single person aiming to have a comfortable lifestyle in retirement, will need a lump sum retirement benefit of $545,000.

A couple also seeking a comfortable lifestyle, will need $640,000.

ASFA Retirement Standard Budgets, March Quarter 20183: Comfortable Lifestyle

Aged 65 Retirement income Lump sump required
Single $42,764 p.a. $545,000
Couple $60,264 p.a. $640,000

All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6%. They are based on the means test for the Age Pension in effect as of January 2017.

A comfortable lifestyle: allows for a broader range of leisure and recreational activities, purchase of household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment and domestic and occasional international holiday travel.

Learn more at superguru.com.au

 

1. ESSSuper Member Education Advisers and Financial Planners are authorised representatives of Adviser Network Pty Ltd (Adviser Network). Adviser Network holds a current Australian Financial Services Licence No. 232729 and is responsible for the financial services provided to you. ESSSuper has an arrangement with Adviser Network Pty Ltd to provide financial advice to ESSSuper members. ESSSuper pays Adviser Network a fee for this service. Neither the Board, nor the Victorian Government, guarantee or endorse any recommendations made by Adviser Network, or are responsible for the advice and actions of Adviser Network.

2. MoneySmart is the consumer finance website of the Australian Securities & Investments Commission (ASIC).

3. The ASFA Retirement Standard is produced and updated each quarter by the Association of Superannuation Funds of Australia (ASFA). The March 2018 figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures. ASFA’s 'comfortable' lifestyle assumes you own your own home and want to be involved in a broad range of leisure and recreational activities, purchase household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and enjoy domestic and occasionally international holiday travel.