Determining how much superannuation you’ll need for retirement hinges on two main factors: major expenses in retirement, which can include paying off your mortgage, rent, home renovations, travel, and medical costs, and the lifestyle you desire.
Given the increasing life expectancy, with most people living well into their eighties, planning for at least 20 years of retirement income if you stop working at 65 is crucial.
Several methods can help you calculate the amount of superannuation needed to support your desired lifestyle in retirement.
For those nearing retirement, using a budget planner can help estimate your anticipated expenditures post-retirement.
If you own your home, a common guideline is to aim for two-thirds (67%) of your pre-retirement income to maintain your current living standard.
Various organizations offer insights into retirement spending:
1. Super Consumers Australia provides retirement savings targets for individuals aged 55-59 and 65-69, based on different spending levels: low, medium, and high.
2. The Association of Superannuation Funds of Australia (ASFA) offers a retirement standard, estimating the required amount for a modest or comfortable retirement lifestyle.
Your retirement income can come from various sources, including investments outside of superannuation and assets like your home, particularly if you plan to downsize.
Eligibility for the Age Pension also influences the amount of superannuation you’ll need.
If enhancing your superannuation is a priority, several actions can significantly impact your savings over time:
1. Consolidate Your Super: Combine your superannuation accounts into one to reduce the number of fees you pay.
2. Make Extra Contributions: Boost your superannuation by making additional contributions.
3. Adjust Your Super Investment Options: Review and change your superannuation investment options to better suit your retirement goals.
If your superannuation balance isn’t where you’d like it to be, consider implementing these steps to build your super and increase your retirement savings.
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