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 has shown that to achieve a comfortable lifestyle in retirement, a single person will need to spend $38,101 annually (approximately $730/week) while a comfortable lifestyle will cost a couple $51,132 per year (approximately $980/week). A modest lifestyle will cost a single person $19,686 per year (approximately $377/week) and a couple $27,695 per year or approximately $531 per week.
The Age Pension is currently set at just under 25% of Average Weekly Earnings for a male (a maximum of around $335 a week for singles and $506 a week for a couple), approximately $25-$40 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 Westpac ASFA Retirement Standard for June 2009.
| |
Modest lifestyle $/week
|
Comfortable lifestyle $/week |
| |
Single |
Couple |
Single |
Couple |
| Housing - ongoing |
$71.26 |
$73.70 |
$94.66 |
$97.10 |
| Energy |
$13.09 |
$15.59 |
$14.33 |
$16.83 |
| Food |
$70.24 |
$147.83 |
$139.33 |
$196.43 |
| Clothing |
$14.91 |
$25.71 |
$31.48 |
$57.41 |
| Household goods/services |
$50.64 |
$53.63 |
$90.00 |
$95.22 |
| Health |
$13.33 |
$25.13 |
$56.16 |
$110.44 |
| Transport |
$72.69 |
$73.49 |
$110.92 |
$111.73 |
| Leisure |
$44.83 |
$74.22 |
$143.41 |
$205.89 |
| Personal care |
$26.55 |
$41.85 |
$26.55 |
$41.85 |
| Gifts/alcohol/tobacco |
. |
. |
$23.86 |
$47.71 |
| Total per week |
$377.55 |
$531.15 |
$730.70 |
$980.61 |
| Total per year |
$19,686 |
$27,695 |
$38,101 |
$51,132 |
Source: Westpac ASFA Retirement Standard for June 2009.
To work out your own proposed expenditure, you can use our Budget Planner which allows you to enter your own expenses and returns a total figure.
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? Think about the issues that may be facing you in retirement when preparing your retirement budget.
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:
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 |
$922,700 |
| 60 |
$328,650 |
$575,100 |
$821,550 |
| 65 |
$285,300 |
$499,300 |
$713,250 |
Source: Telstra Super Financial Planning
Use the My retirement calculator to change all the variables to suit your circumstances 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.