In my line of work I often get asked this question and there is no answer that can be applied to everyone. I’ve worked with clients who have a happy and healthy retirement living on $700 per week, whereas others would spend that much just on dining out.
Recently, the Australian Bureau of Statistics has reported that a couple would need around $56,000 to enjoy a comfortable retirement, whilst a single person would require around $41,000. The amount you’d need to have saved for retirement to achieve that was calculated to be $510,000 and $430,000 respectively.
“Comfortable” for one person, though, is “ luxury” for another, and the opposite also applies.
When approaching retirement its important to:
- Establish how much you currently need to live on and assess which of those costs will reduce (or increase) when you retire.
- Look at how much you have in combined superannuation, property and other assets and assess how long your ideal retirement income will last based on that.
- Consider strategies to bridge the gap if there seems to be a shortfall. Do you invest more into superannuation, accelerate loan repayments, cut back on current living standards so as to save more?
- Think about how much volatility you need, or are prepared, to take to achieve your retirement income needs. For instance, a high exposure to shares will give more volatility but possibly higher long term returns. A higher exposure to cash and term deposits will provide lower volatility but lower long term returns.
- Consider the various structures such as account based pensions, superannuation, annuities and the like. These all have different tax and Centrelink implications.
Retirement planning can be a complex area so I suggest you seek advice from a financial planner to establish the most accurate estimate possible.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.