The amount of money that you will need in retirement will depend on your personal circumstances, and what you feel called to do in this next season of life. You may find it helpful to start by thinking what a purposeful retirement might look like for you. It could also help to think about where you might live, and what you expect to do.
Even if you don’t have a clear understanding of what your retirement might look like or how your needs in retirement will be met, there are a couple of free tools available that can help you plan. One example is a tool provided by the Association of Superannuation Funds of Australia (ASFA), who have estimated the annual income that the average Australian might need in retirement for either a Comfortable or Modest lifestyle. Below is a brief summary of the type of each lifestyle, more detailed information about expected living standards for each is available at ASFA’s SuperGuru website.
Comfortable Retirement Lifestyle
- ASFA define a Comfortable retirement lifestyle as one where you can be involved in a broad range of leisure and recreational activities and have a good standard of living, including good quality clothing, occasional overseas holidays and private health insurance.
- ASFA estimate that a single person would need $43,901 each year, and a couple would need $62,083 each year for a Comfortable lifestyle.*
- This equates to a retirement savings target of $545,000 for singles and a combined total of $640,000 for couples.
Modest Retirement Lifestyle
- Slightly higher income than the Government Age Pension, enabling you to afford basic activities including, occasionally dining out, annual domestic holidays and maintaining a modest car.
- ASFA estimate that a single person would need $27,987 each year, and a couple would need $40,440 each year for a Modest lifestyle.*
- This equates to a retirement savings target of $70,000 for both singles and couples, which reflects the fact that the base rate of the Government Age Pension (plus various pension supplements) will be the primary source of income for a Modest lifestyle.
Note that the amounts above assume that retirees own their own home outright and are relatively healthy. If you think you may be renting in retirement, you may wish to factor this into your budget planning. You can read more about the assumptions behind the ASFA Retirement Standard here.
While your superannuation savings may be a key source of your retirement income, other sources of income could include investments outside of super and the Government Age Pension. If you need help estimating your expected total annual income from all sources (not just superannuation) when planning for your retirement, you may wish to consider obtaining personal financial advice.
If you have any questions please contact our Member Care Team – we’re here to help.
* ASFA update these figures quarterly to reflect changes in the Consumer Price Index (CPI). These are national figures for the September 2020 quarter.