How much super do you need to retire?
The Association of Superannuation Funds of Australia (“ASFA”) report each quarter the annual cost of living for both a Modest and a Comfortable lifestyle in retirement.
The December 2013 figures have recently been released.
Annual Budget
According to ASFA a couple who own their own home outright with no remaining mortgage or associated debts will require around $33,000 per annum in order to live a Modest retirement lifestyle (Modest considered to be better than surviving on just the Age Pension, but still only able to afford fairly basic activities).
The same couple will require around $58,000 per annum in order to live a Comfortable retirement lifestyle (comfortable considered to be enabling 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 occasionally international holiday travel).
How much Super do you need to Retire?
So how much do super you need to retire and meet these annual costs?
According to calculations performed by SuperCentral, assuming both members of a couple retire at age 65 and that they wish to draw down the minimum pension each year, they will require a combined super balance of nearly $1.2 million in order to achieve a Comfortable retirement lifestyle. This figure falls to around $665,000 if aiming to achieve only a Modest retirement lifestyle!
Assuming a conservative investment strategy is employed from the date of retirement whereby returns match inflation, and the annual draw down is also increased only in line with inflation, the super savings would be expected to last around 20 years (at age 65 the average male is expected to live for a further 21 years, the average female for a further 24 years).
You can view a breakdown of the ASFA calculations here.
You can view the details and basis of the SuperCentral calculations here.
Disclaimer: CapitalQ does not hold a license to provide financial advice and accordingly the figures provided should not be taken as a recommendation or advice as to your own requirements or circumstances. They are provided as a guide only. You should not rely on these figures and you should seek personalised, independent advice before making any investment or retirement decisions.