Are your thoughts starting to shift towards retirement?
Are you spending your days dreaming of that trip around Australia, spending more time with the grandkids or simply just…being?
Chances are retirement is in your short-term future plans.
If so, you have undoubtedly been checking your finances and super and doing some mental calculations in your head and asking:
Do I have enough funds to retire comfortably?
How much do you need to retire?
It all comes down to your magic number. How much do you need to comfortably sustain your lifestyle once you finish working?
Naturally, this number may very well not be the same number you spend during your working life. As we age, we tend to spend less. Less spent on nights out on the town, school fees for our kids…. the list goes on.
So let’s start with the basics of what determines a ‘basic’ retirement versus a ‘comfortable’ retirement. This will help gauge where you fit and what your retirement figure is. A great place to start is ASFA (the voice of Super).
“Since 2004 The ASFA Retirement Standard has served as Australia’s trusted retirement savings companion, providing a comprehensive breakdown of expenses for both a comfortable and modest lifestyle, for couples and singles to maintain a healthy, vital and connected lifestyle in retirement. It also estimates the superannuation balance required to achieve this.”
This is how AFSA describes a modest vs comfortable retirement for couples and singles. The assumption is that you own your home outright as a retiree and do not have a mortgage.
Feature of a modest vs comfortable retirement
A modest retirement is a step above an expected pension lifestyle with basic health cover, limited social outings and expenditure. A comfortable retirement allows for a higher standard of living with private health insurance, social activities and meals out along with exercise and hobby allowances and even travel.
The expected budget for both styles of retirement are listed below, and change dependent upon your age.
Household budgets for a modest vs comfortable retirement
Expected super balance for a modest vs comfortable retirement
source: AFSA
It goes to say, that if you are looking to do extensive travel, you will need to adjust your budget accordingly. The costs of an international trip every year vary very differently from a domestic one.
When you look at these figures, are you on track for the retirement you have always dreamed of?
If not, get in touch with our Financial Planning team by booking an appointment to discuss your retirement goals and the path to get there. A few simple steps in the years before retirement can make all the difference.
