It’s the million dollar question, and unfortunately one that does not have an easy answer. The short answer is that it all comes down to what you want or need to spend in retirement, but as that’s not all that helpful, let’s take a look at the longer answer.
The most important thing to remember is that you aren’t focussing on the lump sum you’ll have when you retire, but rather what retirement income your super will generate. The next step then is to work out what income you want or need, which is the harder bit, and will vary hugely from person to person.
It can feel a little like one of those “how long is a piece of string?’ questions, but fortunately there are a few measures you can use. One is a general rule of thumb, which is you should aim for two-thirds of your pre-retirement income.
Another option is to use the YourSuperFuture advice tool which is available at no additional cost, via Member Online. This allows you to input information reflecting your own personal circumstances, to set and work towards a retirement income goal.
MoneySmart also has a retirement income projection calculator on their website, which allows you to see what income you are likely to have from super and the age pension when you retire.
Another option is to refer to the ASFA Retirement Standard.
The ASFA Retirement Standard1 benchmarks the annual budget for a couple or single person living either a modest or comfortable retirement. It’s calculated by taking a very detailed breakdown of living expenses and assigning an annual dollar spend to each. The latest figures calculate that a couple aged 65 who owns their own home should budget $60,063 a year for a comfortable lifestyle. A modest lifestyle is $34, 911.
What’s really important to consider though is what’s deemed to be a ‘comfortable’ lifestyle. You’ll find a full breakdown of expenditure on the ASFA website, but for example it assumes around $80 a week for dining out, and $13 a week for day trips and outings to the cinema or sporting events. So if you think you’ll want to spend more, you’ll need to budget more.
It’s a pretty simple equation really, if you want more money to spend in retirement, you need to contribute more now. We understand that finding that bit extra to put in can be difficult, especially if retirement is still a distant dream, but it really can make a huge difference to your future. What you put in now could make the difference between holidaying on an exotic beach or at home!
The best thing is that there’s always time to make a difference. Here at QIEC Super we’re here to make super simple, so you can make the right decisions for your circumstances. That’s why we have a wealth of resources on our website outlining strategies you can take to boost your balance. And if you want any more information, or would like to speak with the QIEC Super Financial Planning team, just give us a call on 1300 360 507.
1 ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. All figures quoted sourced from the ASFA Retirement Standard, June quarter 2017 report available at https://www.superannuation.asn.au/resources/retirement-standard
YourSuperFuture and QIEC Financial Planning advice are provided by My Super Future Pty Ltd (ABN 38 122 977 888) Australian Financial Services Licensee (AFSL no. 411440) and are authorised to provide personal financial advice. The Trustee QIEC Super Pty Ltd (ABN 81 010 897 480) is not responsible for, and does not accept liability for the products or services or actions of My Super Future Pty Ltd. You should use your own judgement before taking up any product or service offered by My Super Future Pty Ltd. Fees may be charged for the provision of personal advice, but where the advice relates to your superannuation, these costs may be deducted from your superannuation account.