What is a comfortable retirement for those looking to retire

Are you considering retirement, or wanting to plan for retirement? Then you need to know how much you will need when you retire.

The Association of Superannuation Funds of Australia (ASFA) published their December 2021 figures and I’m sure you won’t be surprised to learn that Singles require a minimum of $45,962 and Couples $64,771.  Now that is assuming you are retiring after age 65 and own your own home.

ASFA claim that to generate this income you will need at least $545,000 if you’re single and $640,000 in super if you are a couple, plus it assumes you’ll qualify for a part aged pension.  Treasury says if you can maintain 65-75% of your pre-retirement income then you’ll be OK.

Now, these numbers are all well and good if you are the perfect definition of someone who requires a “comfortable” lifestyle, but comfortable means different things to different people and it’s all about what is important to you, not the average.  After all, some of our clients are very comfortable living off $40,000, others require well over $100,000, it’s all about what you are used to and want in life.

Instead of worrying about the large sums of money required to retire, it’s more important to understand the level of income you require once you’ve retired and worked out from there how much you require in order to retire comfortably, considering your assets and other entitlements such as the Age Pension.

A good starting point to determining how much you’ll need is to consider your current living expenses.  A common mistake here is most people will use the “off the top of my head” figures to determine expected living expenses.  The issue with that is, that often we underestimate or overestimate expenses, which leads to very misleading results.  We find the best way is to export all the transactions from your bank accounts and credit/debit cards for the past 12 months, work out how much you’ve spent and there’s a great starting point.

From there we can work out how much you need as a lump sum and then how much you need to put away to achieve that, assuming you have time on your side.

If you are about to retire and you don’t have the time to make additional savings, then we can work backwards as to when your investments are likely to run out and consider what strategies we can implement such as downsizing when the time is right to top up your super.

Now don’t forget when you are planning to retire, it’s not just about the money, but peace of mind, staying fit and healthy, socially engaged, and connecting with family and friends.  Make sure you know what you are retiring to and not just retiring from a job.

With 37% of women over the age of 65 living by themselves, it’s never too early to start planning.  Especially given that women tend to retire with around half the amount of retirement savings that of men their age.

Are you ready to start your retirement journey or planning for it?  Reach out to the JBS Financial team to have a chat about your circumstances and to ensure the right strategy is in place for you.