I was speaking with a financial planner colleague recently about the questions prospective clients ask us when we meet them for the first time.
One very common query posed is “how much money will I need to live comfortably in retirement”? Now unfortunately there’s no easy answer to that question. Everyone is different and everyone has different ideas as to what represents “comfortable”.
I have a client who lives a very meager and simple existence, but he’s happy. He gets to do the things he enjoys like fishing, and a quiet afternoon beer or two. He is early to bed and early to rise, and could only be described as relaxed and comfortable. I work with another retired couple who enjoy regular restaurant meals (nearly every night). They own a very nice home and travel extensively every year. They too are happy, relaxed and comfortable.
The Association of Super Funds Australia (ASFA) estimates that a couple aged around 65 will need $60,977 per annum to live comfortably. A single person of the same age will need $43,317. Both budgets assume that the retirees own their own home outright and are relatively healthy.
To quote ASFA,
“A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasional international holiday travel”.
There’s no substitute, though, for taking the time to really consider what type of retirement will be comfortable for you personally. Use an expenditure worksheet to add up the costs of the essentials and the “extras” you’d like if you were to be retiring tomorrow. We are happy to provide a worksheet for you. Assume you have paid off your house and have no other debts. Also assume the kids are off your hands, you’re no longer working and you’re free to do as you choose.
It’s a very interesting and thought provoking exercise and is really the only way to work out “your number”. Once you’re clear on that number, you will understand what comfortable means to you. Then you can begin to plan the strategies required to enable you to live your own version of a comfortable retirement.
For advice on your retirement number, give Steve May Financial Services a call and start a conversation today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
