Retirement Income

How much do you need to retire comfortably?

How much do you need to retire comfortably?

Calculating how much money you’ll need for your retirement can be difficult because you need to take a number of factors into account including how much money you have now, how long it will last you and what your plans are for your future.

The other factors you need to take into account include your lifestyle and the number of years you’ll spend retired.

Additionally, estimating how much you’ll have when you plan to retire depends on factors such as your current salary, super balance and assets. With so many factors, it’s easy to see why you might need a retirement calculator to get an idea of your retirement savings needs.

Companies such as AMP have retirement calculators on their sites and you can use these to get an indication of whether there’s a shortfall between how much you are estimated to have and how much you’ll need in retirement, and put a plan in place to address the situation.

How much is enough for retirement?

The Association of Superannuation Funds of Australia (ASFA) estimates that Australians aged around 65 who own their own home and are in relatively good health, will need between $535 and $837 per week for one person and between $774 and $1186 per week for a couple.

The lower amount will be for a more modest lifestyle but this is still better than living on the age pension. While the higher amount would be for a more comfortable lifestyle with a broad range of leisure and recreational activities – including domestic and international travel.

For Australians on above-average incomes, another rule of thumb to estimate how much money you’ll need in retirement is to assume you will require 67% (two-thirds) of your pre-retirement income to maintain the same standard of living.

What are your retirement lifestyle expectations?

Ultimately, how much money you'll need for your own retirement is very personal, and will depend on your own situation, wants, needs and lifestyle expectations. It may help to factor in your day-to-day spending habits, your recreational activities and hobbies and whether you’ll be entering retirement debt-free.

How long will you work for?

The age at which you retire can have a significant impact on how much money you have and how much money you need in retirement. It can depend on factors such as your health, debts, super balance, age you can access your super, whether you have dependants and your partner’s retirement plans (if you have one).

How long will you be retired?

Keep in mind if you're planning to retire at around the age of 65, it’s likely you’ll live for another 20 years or so. Men aged 65 can expect to live to 84.6 years, while women can expect to live to 87.3 years.

How much money will you have in retirement?

The money you use to fund your life in retirement will likely come from a range of different sources including the following:


Knowing your super balance is a crucial part of planning for retirement because it's likely to form a substantial part of your retirement savings.

The age pension

Depending on your circumstances and assets, you could be eligible for a full or part age pension or alternatively, you may not be eligible for government assistance at all. Check up on this by visiting this age pension site which has a calculator and you can ascertain your eligibility.

Investments, savings and inheritance

You may be planning to downsize your house, sell shares or an investment property, or use money you’ve saved in a savings account or term deposit to contribute to your retirement. Or perhaps an inheritance or the proceeds from your family’s estate may help you out in your later years. So these will all need to be taken into account.

How retirement calculators can help

If you use one of the retirement calculators available online, you can work out how much you’ll need in your retirement.

Often when you go through all the steps of using a retirement calculator, it shows you how much you’ll need to fund your entire retirement and sometimes this points to a shortfall.

While this news may seem scary, it’s not an uncommon situation. Luckily, finding out about the possible shortfall now means there may still be ways to boost your savings before retirement.

What do you do if you won’t have enough to retire?

If you find you’re facing a shortfall in retirement, there are several things you can do to get your retirement on track. You could consider boosting your super through additional contributions, delaying your retirement, adjusting your retirement lifestyle expectations, or selling other assets.

Simply by having an idea of your current and projected retirement savings, thanks to using retirement calculators, you can work out a plan to improve your situation. The earlier you start, the easier it may be for you to reach your retirement goals.

Image: Getty Images





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