Financial advisers offer a variety of figures on how much money you’ll need in retirement; most of which are tied to a percentage of your income just before retirement. However, these figures don't provide much help if you have no idea what your income will be at that time and often don't consider that the things you need to spend money on in retirement are different to your expenditure while you are still working.
This section provides a guide to:
The ASFA Retirement Standard
Is your super on track?
Making extra contributions
The ASFA Retirement Standard
The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.
To find out how much you need to spend to support the lifestyle you desire, you can use the ASFA Retirement Standard Calculator.
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
A modest retirement lifestyle is better than one provided by the Age Pension, but still only able to afford fairly basic activities.
View detailed budgets for comfortable and modest lifestyles.
Is your super on track?
The lump sums needed at retirement for a modest lifestyle are relatively small, being $50,000 for a single and $35,000 for a couple. This is because the majority of the required expenditures as laid out by the ASFA Retirement Standard are met by the Age Pension of $19,522 for a single and $29,434 for a couple (including pension supplements).
However, for a comfortable lifestyle, assuming part receipt of the Age Pension, the lump sum figures required are considerably more; $430,000 for a single and $510,000 for a couple.
Try the ASFA Retirement Projector to see how your super is tracking.
Making extra contributions
If you determine that you are not going to reach your target lump sum on your current level of contributions, you may want to consider making extra contributions and, if you’re eligible, taking advantage of the government co-contribution.
The co-contribution is a payment made by the Commonwealth Government to the superannuation accounts of Australian workers earning less than $61,920 provided they make additional contributions to their super themselves.
Other ways of contributing more to your super fund include:
- Salary sacrificing
- Spousal contributions
The ASFA Contributions Optimiser can calculate some options for getting the most out of your additional contributions.
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