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Saving For Retirement – How Much Will You Need?

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Going from working a steady job to facing the reality of retirement is quite a jump, especially when it comes to knowing the right time for retirement moneywise. Luckily though, the Association of Superannuation Funds of Australia (ASFA) has you covered, providing a retirement guide so you too can know when to retire while still living quite comfortably.

Everyone has their own ways of spending money that ranges from buying much-needed necessities to purchasing luxury items. While some of us are great at saving, others, not so much. From contributing to your super account to receiving age pension, retirement can be, well, tiring when you don’t know what you’re doing. This guide will help get you on the right track to retirement to ensure you make the big step at the right time without struggling with money in the long run.

How Much Does A Retiree Need Annually?

For singles around the age of 65, ASFA finds that a minimum of $23,695 annually is ideal with a bit of wiggle room for extra spending and that $42,962 provides for a more comfortable lifestyle. As for couples, $34,090 is needed each year for modest living or approximately $58,915 for those who aim for a more adequate lifestyle [1].

By the age of 85, singles will need an approximate $23,062 for modest living or $38,460 for comfortable living whereas couples typically need $34,257 for modesty or $53,937 for comfort, as also found by ASFA [2].

ASFA considers a comfortable living style to be one that includes private health, occasional travel, moderate spending on luxury items, and eating out once or twice per week whereas a modest lifestyle would include about half as much luxury spending. ASFA, though, does put into consideration that both a modest and a comfortable lifestyle should include good health and home ownership, which are already incorporated into the statistics above.

How Much Does One Receive From Age Pension?

Updated as of January 2016, full age pension for both singles and for couples separated due to bad health can expect to receive a total of approximately $20,498 annually, just enough for a semi-modest lifestyle of living. For couples, though, age pension is around $30,903 for the two combined and again is about sufficient for a modest lifestyle throughout retirement [3].

Keep in mind, though, that age pension depends on a variety of different factors, including income that may increase or decrease your overall amount of age pension. Listed above is the maximum expectancy for age pension, but never assume you’ll receive that very amount.

Are You On The Right Track To Retiring?

As you may or may not know, the retirement gap is the gap between where you currently stand with your retirement savings and the actual savings you need for a comfortable style of living once you do retire. You may now be wondering whether or not you’ll have enough savings in your super account to make the commitment to retiring, but it’s quite simple once you understand just how important it is to make the right contribution levels to your super.

According to a recent Intergenerational Report (IGR) from the Government, those aged 60 or older had a median super account balance of $95,000 in 2011/12, an amount much too low for retirement, though many of which were expected to receive retirement support through age pension once they reach the age requirement. Seeing this statistic should open your eyes to the true reality of retirement: Not everyone is prepared, but they should be.

Both the IGR and ASFA suggest contributing as much to your super account as possible to ensure a successful retirement. After all, your super account as well as any entitlement to Age Pension is what you’ll be needing to get by day by day on once retired. According to the table below provided by ASFA, one who has an income of $50,000 will end up adding over $50,000 in their super account over the course of 30 years when making 12 percent contributions, versus 9.5 percent [4].

In general, it’s quite important to know whether or not you’re on the right track to retirement. Remember, it’s never too late to start or to increase you level of contributions to your super. Every drop counts.

Contribution levels Wage of $30,000 Wage of $50,000 Wage of $100,000
9.5% $116,000 $193,500 $387,000
12% $146,000 $244,000 $487,000

How Much Should You Be Contributing?

Your level of contributions are dependent on your current income and when you plan on retiring, and your desired lifestyle in retirement. You can find various calculators online to predict whether or not you’re ready for retirement and to figure out whether you’re making contributions large enough to your super account to retire. One calculator called the Retirement Goal Calculator will tell you how much you should save monthly and annually to reach your retirement goal. It’s a good idea to take use of these calculators to help predict where you stand today and if and when you’ll be ready for retirement moneywise.

Please give us a call on 1300 755 521 or email trent@tgfsfinancialplanning.com.au for financial advice regarding your retirement. We’re happy to assist you along the way and give you any additional information you may need to make your retirement a successful one.

TGFS Financial Planning is an Authorised Representative of Consultum Financial Advisers Pty Ltd. ABN 65 006 373 995 AFSL No 230323 (Consultum).

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.


[1]ASFA Retirement Standard (September 2015)
[2]Ibid
[3]Australian Department of Human Services
[4]ASFA November 2014: The future of Australia’s super – a new framework for a better system

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