Take some of the guesswork out of planning for the future. Work out how much super you'll have when you retire, and if it will be enough to fund the lifestyle you want.
1. ESTIMATE HOW MUCH SUPER YOU'LL HAVE
You probably know how much super you have now, but do you know how much you'll have when you retire?
Use the Moneysmart retirement planner (link) to estimate:
- how much money you'll have to spend each year once you retire
- how fees, investment options and contributions will affect your retirement income
You can also use the planner to test out different scenarios and work out how to grow your super.
2. CONSIDER YOUR BIG COSTS IN RETIREMENT
Think about any big costs that might be part of your retirement plans. For example:
- paying off your mortgage
- rent
- renovating your home
- travel
- medical costs
3. THINK ABOUT THE LIFESTYLE YOU WANT
Think about how you plan to spend your money in retirement. If you own your own home, a rule of thumb is that you'll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement.
The Association of Superannuation Funds of Australia (ASFA) provides an industry retirement standard. This estimates how much money you'll need, depending on your lifestyle.
| Retirement standard | Comfortable lifestyle | Modest lifestyle |
| Single |
$43,901 a year $841 a week |
$27,987 a year $536 a week |
| Couple | $62,083 a year
$1,189 a week |
$40,440 a year $775 a week |
ASFA estimates that the lump sum needed at retirement to support a comfortable lifestyle is $640,000 for a couple and $545,000 for a single person. This assumes a partial Age Pension.
ASFA estimates that a modest lifestyle, which covers the basics, is mostly met by the Age Pension. They estimate the lump sum needed to support a modest lifestyle for a single or couple is $70,000.
4. BUILD UP YOUR SUPER
Many things contribute to your income in retirement, including investments outside of super and assets such as your home, especially if you downsize.
If you decide it is important to build your super, there are some actions that can make a big difference over time. Think about:
- consolidating your super into one account so you pay fewer fees
- making extra contributions to grow your super
- changing your super investment options
If you don't have as much as you'd like, it's never too late to build up your super to boost your retirement savings.
5. IF YOU NEED FINANCIAL ADVICE
Planning for your retirement is complex, and everyone's situation is different. Think about getting personalised advice from a financial adviser to help you plan ahead. You can contact Allan & Co, we will help you out.
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