It’s the million dollar question, and unfortunately one that has around a million answers. The short answer is that it all comes down to how much you want to spend in retirement, but as that’s not all that helpful, let’s take a look at the longer answer.
It’s all about retirement income
The most important thing to remember is that you are not focussing on the lump sum you will 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, which is the harder part, and will vary from person to person.
It can seem like a ‘how much is a piece of string?’ question, but fortunately there are a couple of measures you can use. One is a general rule of thumb, which is you should aim for two-thirds of your pre-retirement income. Financial tools are available to help you decide how much income you will need, and information freely available online, such as the ‘ASFA Retirement Standard’ can also help guide you.
What is the ASFA Retirement Standard?
The ASFA Retirement Standard 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 $60,0631 a year for a comfortable lifestyle. A modest lifestyle is $34, 9111.
What is really important to consider though is what is 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.
Save more, spend more
It is a fairly simple equation really: if you want more money to spend in retirement, you need to contribute more now. Finding that bit extra to put in, especially if your retirement is a distant dream, can be difficult but it could make a big impact on your future. What you put in now could make the difference between an annual holiday and staying at home!
Would you like to witness how extra contributions could benefit your final retirement savings balance? Simply log into Member Online and follow the link to QIEC Super’s YourSuperFuture advice tool, available at no extra cost for QIEC Super members.
The best thing is that there’s always time to make a difference. At QIEC Super we’re here to help you reach a better retirement outcome. We have a wealth on resources on our website outlining strategies you can use to boost your balance. If you’d like more information, 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 advice is provided by My Super Future Pty Ltd (ABN 38 122 977 888) Australian Financial Services Licensee (AFSL no. 411440) and is 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.