Do you think you’ll have enough in your super when retirement rolls around? Will you follow the well travelled road to warmer pastures or will you find yourself on struggle street?
How much is enough?
ASFA’s Retirement Standard suggests that to achieve a comfortable standard of retirement living (having money to spend on trips, leisure and lifestyle activities, and discretionary daily living costs), a couple would need $690,000, and a single would need $595,000.1 This is a big number, but can sound doable to today’s working force, particularly those who had compulsory super from the get-go.
But currently, the average 60-year-oldman has a $198,482 super balance, and a 60-year-old woman just $185,264.2 A large proportion of the current retiree population (or those reaching retirement age) haven’t had super for much, if any, of their working lives.
How do you know if you will be retiring with enough? A common yardstick to aim for is 70% of your pre-retirement, after-tax income. Based on the median salary of $60,000($50,000 after-tax), that figure would be around $36,804 per annum.
What can you do to ensure your retirement is as comfortable as it can be?
Increase your retirement savings
For some, this could mean making voluntary contributions to super via things like salary sacrificing (before-tax contributions) or contributions from your after-taxpay. If this isn’t possible for right now, consider reviewing your investment options. The default setting is usually a balanced option, but this can be changed at any time to a higher-growth option which can increase your overall balance over a number of years (the younger you are, the longer you have to recover any investment losses).
Downsizing
For the older age bracket, the downsizer measure (introduced in 2018) means that eligible individuals can make a one-off contribution to their super of up to $300,000 from the proceeds of selling their home. If you owned the property with a spouse, you can both make the contribution into your super funds.
Planning ahead for the less glamorous things
Nobody can completely eliminate the risk of disease, disability or general ill health. Especially as we get older, the likelihood of certain conditions may increase. But planning ahead for the possibility of requiring aged care services and how to fund them is an important part of your overall retirement plan. Start by building a picture of where you’d like to go if you had to move in to aged care. Then begin doing some research on ways to fund a higher-than-basic level of aged care.
One thing you should plan for, is ensuring that you are the least reliant on the Age Pension as possible.
