How much do you need to retire at 65?
09 September 2020
5
min read
The Association of Superannuation Funds of Australia (ASFA) regularly crunches the numbers to help inform Australians on how much super they need to retire. Here's what it looks like for a 65-year-old.
Everyone's retirement goals are different. Depending how old you are when you decide to retire, your income needs to last between 15 and 30 years, so it's important to have an understanding of how much money you might need.
ASFA regularly calculates the current cost of retirement in Australia, against both a ''comfortable'' and a ''modest'' measurement. The latest figures can be found here.
A lifestyle that affords a good car, top-tier private health insurance, regular dining out, domestic and some international travel, and many of the trappings enjoyed during working life.
Better than the Age Pension, but still only able to afford fairly basic activities. No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom.
How much superannuation do you need to retire?
When it comes to retirement, ASFA has calculated that a single person wishing to have a “comfortable” retirement would need, at age 65, a nest egg of about $545,000, or $640,000 for a couple. The incomes needed to be generated from these amounts would be approximately $43,687 and $61,909 respectively.
The assumption is that both groups would own their own home and be in good health.
A modest retirement requires much less superannuation (approximately $70,000 for both singles and couples, as a lump sum) due to the fact that the base rate of the Age Pension (plus various pension supplements) is sufficient to meet much of the expenditure required at this budget level.
The great benefit of ASFA’s calculations is that they give you a target, a figure to aim for when planning your own retirement.
Track your super
The QSuper Retirement Income Calculator shows you what super balance you’re tracking towards, and what income that balance will likely give you.
What does your retirement money get spent on?
ASFA has broken down the weekly costs for essential and discretionary spending, making it simple for you to estimate what your retirement needs may be.
Here are their headline costings for a comfortable retirement:1
| Comfortable lifestyle $ per week |
| |
Couple |
Single |
| House Costs |
$124 |
$119 |
| Housing goods and services |
$95 |
$77 |
| Clothing and footwear |
$51 |
$28 |
| Food |
$212 |
$122 |
| Utilities |
$86 |
$68 |
| Transport |
$147 |
$135 |
| Health services |
$193 |
$103 |
| Leisure |
$278 |
$185 |
| Total weekly spending |
$1,186 |
$837 |
Keep in mind that the figures above assume that a retiree owns their own home outright and is in good health.
Go to the ASFA website for the detailed budget breakdowns, and more information about their Retirement Standard.
While these figures may seem daunting to some, the important thing is to formulate a plan on how to achieve the level of savings you believe you will need. Good advice coupled with determination can get you there.
1. All figures quoted sourced from the ASFA Retirement Standard, June quarter 2020 report, https://www.superannuation.asn.au/resources/retirement-standard, accessed 7 September 2020
2. QInvest Limited (ABN 35 063 511 580, AFSL 238274) is a separate legal entity responsible for the financial services it provides. Eligibility conditions apply. Refer to the Financial Services Guide for more information.