Do you dream of the day you can escape the daily work grind? Do you already have a picture in your mind of the retirement lifestyle you would like to have?
If so, you’re likely to ask yourself, “how much superannuation do I need to retire?” With the rising cost of living, life expectancy, and future uncertainties, it’s vital to ensure that you have enough super saved for a comfortable retirement.
For a comfortable standard of living during retirement, the Association of Superannuation Funds of Australia’s Retirement Standard estimates that couples need $640,000 and singles $545,000.
When it comes to preparing for retirement, many factors come into play. This guide will look at
- How much superannuation do I need to retire?
- How do I estimate how much super I will need?
- What will be my biggest costs during retirement?
- When should I start planning?
By understanding the range of factors that influence the amount of superannuation needed, you can take control of your financial future.
In doing so, you can make smart decisions now that will increase your retirement savings, ensuring you have the best standard of living in retirement.
How Do I Estimate How Much Super I Need?
Estimating your retirement costs can help determine how much super you should aim to have.
Preparing in this way will eliminate any unnecessary stress about your future.
When estimating your retirement costs, it’s important to consider factors like
- Your expected lifespan
- Local area/planned retirement location
- Personal health costs
- Family health costs
Your Expected Lifespan
Your expected lifespan is the average number of years you can expect to live after you retire.
The longer your expected lifespan, the more super savings you will need to support yourself during retirement.
In 2019-21 the Australian Bureau of Statistics estimated the life expectancy for males was 81 and 85 for females.
So, if you retire at 60, you will need enough superannuation to last for at least 20 to 25 years.
Local Area/Planned Retirement Location
The cost of living in the area you plan to retire can influence how much super you will need.
The cost of living varies significantly between cities and suburbs, so research the costs associated with your planned retirement location.
It’s important to take into account the cost of housing, transport, food and other necessities.
Personal Health Costs
If you are healthy, the amount of superannuation needed will be lower than if you have health issues.
It’s essential to factor health costs into your retirement plans.
- Medical expenses
- Dental expenses
- Prescription medications
- Surgery expenses
- Mobility equipment
Family Health Costs
If you have a partner or dependents, it’s essential to factor in their health costs as well as your own when calculating your retirement income needs.
Understanding and planning for these different factors that affect your super needs can be daunting. But you don’t have to do it alone!
Contact us and book an appointment with one of our superannuation specialists.
At GeekBooks, we can help you plan for retirement and estimate how much superannuation you need.
We will also advise you on the best strategies to build your super and ensure you have enough savings for a comfortable lifestyle during retirement.
What Are Likely To Be My Biggest Costs in Retirement?
Your most significant expenses during retirement are likely to be housing and health care. However, there are a few other big retirement costs.
The four highest retirement costs are
- Mortgage/rent
- Home renovations/maintenance/storm recovery
- Frequent travel
- Medical expenses
Many people make the mistake of overlooking the smaller details of costs associated with these factors when planning for retirement.
So let’s dive in and take a look at some of these details.
Mortgage/Rent
Mortgage or rent payments are likely to be a considerable expense in your retirement.
If you don’t own your home, it is important to factor in mortgage repayments and property tax costs. Also, account for any possible future interest rate changes.
For those who plan to rent during retirement, you must factor in rental costs and any associated levies.
The amount of super required is also influenced by the number of single retirees living together, as they can share accommodation expenses.
Home Renovations/Maintenance/Storm Recovery
If you own your home, you will need to consider the cost of renovations, maintenance and storm recovery.
Even if you have no plans to renovate your home during retirement, it’s important to factor in this expense, as repairs may be necessary due to wear and tear.
Home insurance is also an essential expense to cover you in the case of a natural disaster.
Frequent Travel
It’s only natural to want to travel once you’ve retired! Whether overseas or around Australia, make sure you factor in any associated travel costs.
- Flights
- Accommodation
- Travel insurance
- Caravan or campervan site rental
- Caravan or campervan maintenance
- Food
- Entertainment
Medical Expenses
One of the most significant expenses in retirement is medical care. Costs vary from private health insurance premiums to emergency medical help.
The amount of super you need for medical expenses will vary depending on your age and health status.
Any existing medical conditions must be factored in when estimating said amount.
If you have a family still at home, include any additional medical costs associated with them in your retirement plan.
When Should I Start Planning?
It’s never too early to start planning for retirement and the right amount of superannuation.
The earlier you start planning, the more time you have to build up your super balance.
You will also have more opportunities to make sound financial decisions that can help you save money, increase investment returns and secure your financial future.
Choosing the right superannuation fund is vital. As is regularly reviewing your super’s performance to ensure it stays on track to meet your retirement goals.
Getting help from a financial adviser will help you manage your super wisely.
Should I Ask an Expert How To Build My Super?
So, what is the answer to the question, “how much superannuation do I need to retire?” This guide has shown that the figure varies depending on several key factors, from living costs to travel and medical expenses.
If you want help mapping out a solid plan for your retirement, please contact us at GeekBooks.
Our team has the financial and strategic expertise you need to help manage your super fund for maximum returns.
Complete our online booking form or contact us on 02 9158 3591. We look forward to hearing from you!
