Retirement Income

There’s an easy way to figure out if you’ll have enough money to retire

There’s an easy way to figure out if you’ll have enough money to retire

The Association of Superannuation Funds of Australia estimates that the lump sum needed for a couple to retire comfortably is $640,000, or $545,000 for a single person - far from the $1 million that’s often cited. 

If you aren’t sure if you have enough money to retire, there are a couple of online tools that will help you figure it out quick smart. One is ASFA’s Super Balance Detective. To use it, you simply enter your year of birth, and the calculator shows you how much super you should have today. 

Naturally, there are many underlying assumptions behind that number, but it is primarily based on average investment returns and average fees. It’s also based on how much the ASFA Retirement Standard calculates you need to live on after retiring at the age of 67. 

So how much super should you have by now? If you were born in 1970, you should have about $285,000; for those born in 1965, it’s $360,000; for those born in 1960, it should be around $449,000. Those born in 1955 should have about $535,000 saved up, putting them just $10,000 from retiring comfortably (assuming they’re single). 

Another handy calculator is the government’s moneysmart super calculator. Enter your specific super balance, along with your age and income/super contribution details. The calculator will then give you a forecast balance at the retirement age of your choosing, based on achievable investment assumptions (the default settings are for an investment return of 7.5 per cent annually, but you can adjust this number as you see fit). 

There are several things you can do to boost your super. Ensuring your fees are low is one way to get the most out of your super fund’s investment performance. The government’s moneysmart calculator uses investment fees of 0.85 per cent and an administration fee of $74; using these as a guide, if you’re paying more than that, make sure your returns are higher to match. 

Checking in your fund’s performance is also a good idea, and can be done using the ATO’s YourSuper comparison tool. It ranks MySuper products on both fees and returns, and now labels underperforming super funds as such. It will also prompt you to resolve the problem if your super is leaking money because you have multiple accounts and thus, multiple sets of fees. 

Image: Marko Geber/Getty Images

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