How Much is Enough For Retirement in Australia?
The majority of people look forward to retirement. A break from hectic job schedules, where you can now sit back and enjoy the money you’ve earned over the years. However, it is not as easy as that. You need to know how much money you’ll need to retire because this will determine if your retirement dreams can become a reality or if they’ll remain just dreams.
How Much Will I Need to Retire?
The amount of money you’ll need to retire is mostly determined by your living expectations. Your lifestyle expectations are made up of your goals and needs, which decide the type of retirement life you desire.
The ASFA benchmarks the minimal yearly cost of a comfortable or moderate level of life in retirement for singles and couples aged around 67. Both budgets assume that retirees have full ownership of their homes and are in good health.
Comfortable Lifestyle Expectation
The comfortable retirement standard enables retirees to live comfortably in their post-work years. It includes food, transportation, and house maintenance, as well as private health insurance, a variety of exercise and leisure activities, and the occasional restaurant meal. Importantly, it allows retirees to stay in touch with family and friends both digitally and in person, with an annual domestic trip and an overseas trip every seven years.
Modest Lifestyle Expectation
The modest retirement standard budgets for a living slightly beyond the Age Pension, allowing retirees to afford basic health insurance and infrequent exercise, leisure, and social events with family and friends.
What’s a Good Age to Retire?
Many people choose to retire at the age of 65, but there is no set retirement age in Australia and no law that defines when one should retire.
The ASFA has created budgets for persons planning to retire between the ages of 67 and 85 based on its findings. These budgets are based on the retirees’ living expectations.
Around Age 67
Singles need $45,962 while couples require, $64,771 to live a comfortable lifestyle every year. To live a modest lifestyle, on the other hand, singles require $29,139 while couples need $41,929 annually.
Around Age 85
Singles need $43,193 while couples require, $59,837 to live a comfortable lifestyle every year. To live a modest lifestyle, on the other hand, singles require $27,286 while couples need $38,997 annually.
These figures are calculated based on life expectancy. If you retire at 65, you may expect to live to be 84 years old as a man and 87 years old as a woman. While for age 84, men are projected to live until the age of 91, while women, age 92.
Where will my retirement funds come from?
Now that you have an idea of how much you’ll need in retirement based on your age, marital status and lifestyle expectations, you might wonder where you’ll get these funds from.
Your retirement funds will most likely come from:
- Superannuation (or super) - money placed aside while you’re working to help you meet your financial demands in retirement.
- Age pensions – Pensions give income support to the elderly in Australia. People who meet the age and residency requirements, as well as a means test, are eligible for the Age Pension.
- Investments and savings – money saved aside for retirement or investments made in stocks, bonds, or real estate can also help you fund your retirement lifestyle.
With proper planning and calculations, you can enjoy the retirement of your dreams in Australia.