Feel like retiring but not sure when you'll be able to? It helps to know if you'll have enough savings to provide an income that will give you the lifestyle you want in retirement and if not, how you plan to achieve this.

Stop dreaming and start planning

We all have goals in life. For some they are small, such as eating healthier and exercising or saving for a holiday, while for others they are large like starting a business or retiring comfortably.

But regardless of whether your goals are big or small, planning ahead and understanding the steps you need to take today and in the future is an important part of making your dreams a reality.

Most people need some assistance to develop a retirement plan. For some it’s simply that they don’t have the time or expertise to put a financial plan in place, while others may just need help getting started and having someone to check in with every now and then to ensure they are still on track.

Want to know more about financial planning? Head to the retirement section of our new online e-learning platform eisuper.com.au/MoneyMatters and take a look through our financial planning module today.

Understand where your income will come from in retirement

Super is money put aside while you’re working that will be used to fund your lifestyle when you retire. Your super grows over time and you can access it when you retire and reach your preservation age – which ranges from 55 to 60 depending on the year you were born¹ or when you reach age 65.

While many Australians rely at least partially on the Age Pension in retirement, it’s not a lot of money and is unlikely to support the lifestyle most of us want in retirement.

If you want to travel overseas, drive a reasonable car and regularly eat out in retirement, you’ll need to have enough put aside in your super to pay for a higher standard of living.

Find out how much you’ll need?

The Association of Superannuation Funds of Australia (ASFA) Retirement Standard estimates an individual requires $27,913 a year to live modestly and $43,787 to live comfortably in retirement. For couples, these amounts are $40,194 and $61,786 respectively.²

A couple retiring today at age 65 and owning their own home would need a lump sum of around $640,000 to pay for a comfortable lifestyle in retirement while an individual would need about $545,000². At these savings levels, a part Age Pension could still be used to help meet your income needs (depending on your other assets).

Without a part Age Pension to rely on, retirees would need significantly higher savings to support a comfortable lifestyle.

When can you retire?

To figure out when you can retire, you'll need to do some calculations:

• Estimate how long you're going to live. According to current life expectancy from the Australian Bureau of Statistics (ABS), if you were to retire now at age 65, you could expect to have 20 years of retirement ahead of you (slightly less for men). As life expectancy is trending upwards, it's likely healthy individuals will need to plan for longer than this and save accordingly.
• Figure out how much annual income you need. This depends on the lifestyle you want to live. If you enjoy eating out regularly, going on holidays and generally appreciate a few finer things in life, you won't want to sacrifice this when you retire. If you don’t plan on travelling, only eat out occasionally and are relatively careful with your money, then your income needs won't be as high.
• Work out your expenses. Think about whether you’ll still have mortgage repayments to make and if there are any other unique expenses that might need to be accounted for. You need to consider how much income you will need to support yourself and the lifestyle you want when you retire.

Boost your super for a comfortable retirement

To retire at the age you want and lead the kind of retirement lifestyle you desire, you need to take some steps today to ensure you have enough super in the future. Here are a few key tips:

• Consolidate your super accounts into a single fund.
• Make additional contributions from your before or after-tax salary.
• Find out whether you're eligible for the government co-contribution.
• Get your spouse to make super contributions on your behalf, or make contributions to your spouse’s account to help them out.
• Consult a financial planner about the right investment strategy for your super.
• Work with a financial planner to develop a retirement plan that will identify how much you need to retire based on the type of retirement you want.

How soon you can retire is entirely up to you - and your super! To find out more about how to boost your super, make an appointment with an EISS Super Financial Planner.

¹ Refer to ato.gov.au for preservation age brackets.
² ASFA Retirement Standard, 2018.