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.
We often hear about retirement being at age 60 or even age 65 (when you can receive the Age Pension) but, there is no set retirement age in Australia. Technically, you can retire whenever you’re ready. The challenge is being able to afford to retire and this often comes down to how much you have in your super
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.
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard estimates an individual requires $27,368 a year to live modestly and $42,764 to live comfortably in retirement. For couples, these amounts are $39,353 and $60,264 respectively.2
A couple retiring 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. Individuals would need about $740,000 and couples would around $1.01 million or more.3
To figure out when you can retire, you'll need to do some calculations:
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:
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 Financial Planner today.
1 The preservation age for individuals born before 1 July 1960 is 55. For individuals born between 1 July 1960 and 30 June 1961 it’s 56. For individuals born between 1 July 1961 and 30 June 1962 it’s 57. For individuals born between 1 July 1962 and 30 June 1963 it’s 58. For individuals born between 1 July 1963 and 30 June 1964 it’s 59. For individuals born after 30 June 1964 it’s 60 years.
2 ASFA Retirement Standard, March Quarter 2018.
3 Assumes 7% a year return after fees and taxes reinvested. Money runs out after 25 years. Calculated using ASIC MoneySmart’s ‘retirement planner’ calculator.
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