We’ve all taken the time to dream about retirement, particularly if we’re closing in on retirement age. Those dreams might involve traveling overseas, pursuing a new hobby, writing a book, or making a move to a warmer climate. But behind these plans is the age-old question, how much super do I need to retire?

How much super will you need in retirement?

The answer to this question depends on a few factors, the most important of which is the kind of lifestyle you’ll be leading once you’re retired. The amount of super you need will also be heavily influenced by whether you’re retiring as a single, or you have a partner. 

One general rule of thumb used is that your retirement income should be about 70% of your pre-retirement income. So, if you make $100,000 each year before retiring, $70,000 each year will allow for a comfortable retirement.

Moreover, the Association of Superannuation Funds of Australia’s Retirement Standard states that for a comfortable retirement, a single person will need $545,000 of superannuation, while couples will need $640,000. Considering that by 2050, the average life expectancy will be 91 for males and 93 for females, that money will have to last some time.

This is how to estimate how much super you’ll need

The figures above are based on a ‘comfortable lifestyle’, entailing costs such as regular entertainment, socialising, and private health cover. MoneySmart estimates that this type of lifestyle will cost a single person about $45,962 each year, or $880 per week. Those figures are $64,771 each year and $1,241 weekly for a couple.

On the other hand, a more modest lifestyle, with less entertainment, less spent on clothing, and a closer eye kept on utilities, will cost less. The estimated figures for this kind of lifestyle from MoneySmart are $29,139 annually and $558 each week for a single, or $41,929 a year and $803 per week for a couple.

What are the biggest costs in retirement?

So, what necessary costs, both ongoing and one-off, are behind these figures?

Owning a home

While 75% of retirees own their home, the remaining 25% either rent or pay a mortgage. If these costs continue through retirement, they will eat up a significant chunk of your superannuation balance.

Living expenses

Living expenses like food, clothing, haircuts, fuel, and other necessities will add up over the course of your retirement. What’s more, where you actually live can influence how much you’re paying for these expenses. A more affluent area will end up costing you more.

Vehicle

Many retirees purchase a new vehicle in retirement. This can be an expensive outlay, and maintaining an existing car can also present a sizeable cost. 

How much super should I have at my age?

Are you wondering whether you’re on track to have enough superannuation for a comfortable retirement? You’re certainly not alone. 

Factors that impact these figures include changing retirement ages, inflation, and increases in the cost of living. In fact, earlier this year, the Sydney Morning Herald reported that retirees are facing the biggest cost of living increase in more than 11 years

The Review My Super How much super should I have page, which is based on data from Super Guru, estimates how much super you need by each age to be on track for a comfortable retirement. See below snippet:

Age Balance
25 $24,000
30 $61,000
35 $102,000
40 $154,000
45 $207,000
50 $271,000
55 $345,000
60 $430,000
65 $523,000

If you don’t have as much as this guide states you should, it’s not too late. There are ways to build up your super so that you can reach your target superannuation balance.

How to build up your super

There are a few measures you can take to ensure that you end up with enough superannuation for a comfortable lifestyle.

Consolidate your super

The first is to consolidate your superannuation accounts (if you do have more than one). An account that is sitting dormant will probably be eaten up by fees, which is simply an enormous waste of money. On the other hand, consolidating your money into one account will ensure you’re making the most of your investment returns.

Review your investments

The first is to consolidate your superannuation accounts (if you do have more than one). An account that is sitting dormant will probably be eaten up by fees, which is simply an enormous waste of money. On the other hand, consolidating your money into one account will ensure you’re making the most of your investment returns.

Additional contributions

Another measure is to make personal contributions such as salary sacrifice contributions on top of your employer contributions. These will compound over time, adding to your retirement balance. However, too many personal contributions can impact your tax bill, so again, obtaining professional advice is a must.
See Review My Super’s Contributing to Super page for a rundown of the different ways you can contribute to super.

Still not sure about how much super you need to retire? Get in touch with a superannuation expert today. Simply fill in the ‘Speak To An Advisor’ form on the top of this page.

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