As a guide to how much you may need in super, a ‘retirement living standard’ is produced by the Association of Superannuation Funds of Australia (ASFA). It describes two types of retirement lifestyles – ‘modest’ and ‘comfortable’.
A modest retirement lifestyle is considered better than the Age Pension, but you may only be able to afford basic activities and items, such as one or two short breaks in Australia each year, infrequently eating out at restaurants, reasonable clothes, owning an older, less reliable car and not having budget for home improvements.
A comfortable retirement lifestyle enables a healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living with the financial capacity to afford private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
Both lifestyles assume retirees own their own home outright and are relatively healthy.
As at the December quarter 2015, the ASFA Retirement Living Standard found a couple aged 65 leading a modest retirement lifestyle would need an annual income of about $34,226. For a comfortable lifestyle, the same couple would need an annual income of $59,236. In order to achieve a comfortable standard of living in retirement, the couple would need minimum super savings at retirement of around $640,000.
The age at which you retire will have an impact on how much superannuation you may need. The longer you can remain in the workforce, the more you delay relying on super as a source of income. It also means more time to grow your super. Employer Superannuation Guarantee contributions, currently set at 9.5% of your base wage or salary, may be received by an Australian super fund regardless of the member’s age.
None of us know exactly how long we will live for however increasing life expectancies may mean you could be in retirement for 20 or 30 years or longer. Your superannuation can continue to support you over this period though without sufficient funds, you could face the possibility of outlasting your nest egg.
This information is current as at 15/08/2016.
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.
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