What is needed for a comfortable retirement?
The amount of savings needed for a comfortable retirement varies from individual to individual. Variables such as longevity and possible medical expenses make determining a benchmark amount of savings difficult to determine. But peace of mind can be assisted by addressing specific issues and making preparations in advance.
To assist with retirement planning the non-profit Association of Superannuation Funds of Australia (ASFA) releases quarterly on its website, Super Guru, a “requirement standard”. This standard is the amount of money needed by Australian individuals or couples to finance either a “comfortable” or “modest” standard of living during their retirement. The requirement standard is adjusted for inflation with each new release.
Ending 30 June 2018, ASFA figures indicate that for a “comfortable” retirement individuals need $545,000 and couples $640,000. These amounts would generate annual pensions of $42,953 and $60,604 respectively. Please see the table below for a lifestyle analysis of these annual pensions.
Also note that the ASFA figures for annual pensions are higher than the government Age Pension base rate (before payment of supplements) which is $21,222 for individuals and $31,995 for couples. The Age Pension is for people with insufficient superannuation or lacking financial resources for an adequate retirement income. Therefore, superannuation works together with the Age Pension. The Super Guru website states that, “Most people – women in particular – will continue to be eligible for a full or part Age Pension, supplemented by whatever superannuation benefits they receive.”
According to ASFA, as people grow older their spending changes and that by age 85 annual budgets drop by approximately $1,000 for “modest” lifestyles, and $5,000 for “comfortable” lifestyles.
Hillyer Riches Management Pty Ltd , accountants and advisors located in Caulfield, is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.
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