How much super is enough?
Most Australians imagine enjoying their retirement with the same level of comfort enjoyed during their working life. The reality for many will fall below this expectation. To achieve the retirement lifestyle you have earned you need to plan early. The first step is to put a dollar figure on the retirement lifestyle you are after.
How much will a comfortable lifestyle cost?
Australia's leading superannuation body ASFA (The Association of Superannuation Funds of Australia Limited) has shown that to achieve a comfortable lifestyle in retirement, a single person will need to spend $39,852 annually (approximately $766/week) while it will cost a couple $54,562 per year (approximately $1,049/week). A modest lifestyle will cost a single person $21,587 per year (approximately $415/week) and a couple $31,263 per year or approximately $601 per week.
The Age Pension is currently set at just under 25% of Average Weekly Earnings for a male (a maximum of around $358 a week for singles and $539 a week for a couple), approximately $60 less than is required for a modest lifestyle.
What you get for your money
The table below details the costs of a comfortable lifestyle versus a modest lifestyle, according to the ASFA Retirement Standard for March 2011.
|
Modest lifestyle $/week
|
Comfortable lifestyle $/week |
|
Single |
Couple |
Single |
Couple |
| Housing - ongoing |
$56.67 |
$54.40 |
$65.68 |
$76.14 |
| Energy |
$32.19 |
$42.76 |
$32.67 |
$44.31 |
| Food |
$74.88 |
$155.10 |
$106.97 |
$192.54 |
| Clothing |
$17.49 |
$28.39 |
$37.86 |
$56.79 |
| Household goods/services |
$25.61 |
$34.73 |
$72.05 |
$84.40 |
| Health |
$34.41 |
$66.41 |
$68.27 |
$120.49 |
| Transport |
$90.98 |
$93.56 |
$135.58 |
$138.16 |
| Leisure |
$72.60 |
$108.17 |
$220.02 |
$301.51 |
| Communication |
$9.17 |
$16.05 |
$25.19 |
$32.06 |
| Total per week |
$414.00 |
$599.56 |
$764.28 |
$1,046.39 |
| Total per year |
$21,587 |
$31,263 |
$39,852 |
$54,562 |
Source: ASFA Retirement Standard for March 2011.
To work out your own proposed expenditure, use our Budget Planner to enter your own expenses and work out your total expenditure.
Your changing needs
It is important when you are preparing your budget to consider what your circumstances may be in retirement. Will you have a mortgage, will you still have kids at home, will you be caring for an elderly relative?
What will my lump sum buy?
Once you have worked out how much annual income you will need, you can work out the lump sum that will generate this income.
You will need to consider:
when you want to retire & how long your income needs to last
your tolerance to investment risk
whether you may be eligible for Government assistance.
The table below provides a broad indication of what might be required to provide different levels of income at different ages.
You should note that there are many variables which will affect the exact sum required, including your life expectancy and the investment earnings on your lump sum. Please check the assumptions for full details.
Indicative lump sums required to achieve various net annual incomes
| Age at retirement |
$20,000 income |
$35,000 income |
$50,000 income |
| 55 |
$364,400 |
$640,200 |
$921,050 |
| 60 |
$328,650 |
$575,100 |
$821,550 |
| 65 |
$285,300 |
$499,300 |
$713,250 |
Source: Telstra Super Financial Planning
Use the Telstra Super Simulator to estimate your retirement benefit and track how close you are to achieving your retirement goals.
There are many things you can do to boost your super and better your standard of retirement. The sooner you start the better, but it is never to late to make a difference. More information is available at Maximise my balance at retirement .
To get the most out of your situation, you'll need professional financial advice. Telstra Super Financial Planning offer advice to members at no additional cost. To make an appointment, you can call Telstra Super on 1300 033 166 or request an appointment online.