Answering the Question Everyone wants to know – How much do I need to Retire?


Without a doubt the most common question regarding retirement that financial advisors are asked by their clients is “How much do I need to retire?” In a utopian world the financial advisor will be able to  type some numbers into a spreadsheet and give the client an exact figure. Sadly we don’t live in this utopian world meaning the answer to this question is “It depends”. But what exactly does it depend on? Well the two main factors that will determine how much money you need in your super and savings accounts to retire is the lifestyle you want to live when you are retired and how long you expect to live in retirement.

With these two points in mind let’s do a few calculations to see how much on average people in different circumstances require to retire.

For example, a couple from Brisbane retire at age 65 expecting to live a modest lifestyle which would entail infrequent dining at restaurants and cafes, few holidays and only occasional spending splurges then for a 20 year retirement this would require approximately $34,000 a year in living costs meaning with the pension supplementing this cost you will need a lump sum of approximately $440,000 available in your super and savings account.

However, consider a Sydney couple who also retired at age 65 but expect to live a more comfortable lifestyle with more frequent holidays, regular dining at restaurants and cafes and being able to purchase new consumer goods such as cars, jewellery and other things on a relatively regular basis. Over the same 20 year retirement this would require around $59,000 a year in living costs meaning you would require a lump sum of over $745,000 in your savings and super account.

Clearly this question of how much is extremely personal and is best answered by a one on one consolation with a financial planner to determine your lifestyle needs, estimate how long these needs must be sustained and ultimately provide a dollar figure on how much should be in your super and savings accounts when you retire.

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