One of the common questions I’m asked is “how much money do people need in retirement?”. It crosses most people’s minds at some point because they don’t particularly relish the thought of ending their working life without enough money to live on through their golden years.
The answer isn’t necessarily simple, though.
The Association of Superannuation Funds of Australia (ASFA) releases regular information about what is considered modest and comfortable retirement lifestyle incomes for retirees. Information from the September 2017 quarter shows the following figures, assuming home ownership:
Couple – Modest Lifestyle – $35,189 per annum
Couple – Comfortable Lifestyle – $60,457 per annum
Single – Modest Lifestyle – $24,506
Single – Comfortable Lifestyle – $44,011
I’ve met people who can live very comfortably on less and I’ve met people who require far more to meet their required retirement lifestyle. It’s important to work out what YOUR number is and not to rely on averages. A good financial planner can help you through that process.
If we assume for a moment that the “comfortable” figures are right for you, then the ASFA estimates you’ll need investments of around $650,000 for a couple and $545,000 for a single person at age pension age – assuming partial age pension.
But what if you want to retire before age pension age? Age 67 is a long time to wait! It follows that you will need a larger lump sum as you’ll need to support your living costs for a while without the age pension helping out.
As you can see, the question isn’t one that can be answered in the same way for every person that asks it. Part of the answer is to seek personalised financial advice as early as possible and develop a plan that you understand and can follow. Too many people leave it until too late to start the planning process, and they’re often the ones who are destined to have modest (or less) income in retirement. Feel free to start a conversation with us today so you can start getting on track for the retirement you want tomorrow.
Post by Steve May
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.
Shanley Financial Planning Pty Ltd trading as Steve May Financial Services (ABN 19 612 825 180) is a Corporate Authorised Representative of (1265706) of Sensibly Pty Ltd (AFSL 533923)
Nick Shanley, Steve May and Luke Styles are Authorised Representatives of Sensibly Pty Ltd (AFSL 533923)