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How much do you need to retire?

How much do you need to retire?

Figuring out how much you will need when you retire requires planning and thought.

Having an idea of what sort of lifestyle you would like in retirement is a good starting point when determining how much you need to retire.

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard has researched some benchmark annual budgets that might give you some idea of what you could need for a ‘comfortable’ or ‘modest’ retirement lifestyle.

Some of your expenses might be met by the Age Pension. However, the amount of savings needed to fund ASFA's definition of a 'modest' retirement is greater than the Age Pension.

ASFA defines a 'comfortable' retirement lifestyle as one where an older, healthy retiree can be involved in a broad range of leisure and recreational activities and have a good standard of living through the purchase of things such as household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

Making your own estimate

To personalise to your own circumstances you can estimate your costs per month for the following categories ASFA outlines:

  • Housing
  • Energy
  • Food
  • Clothing
  • Household goods and services
  • Health
  • Transport
  • Leisure
  • Communications

You can then see whether you’re likely to reach this retirement income requirement by contributing to your super at your current rate by using our Retirement Calculator.

It’s important to keep in mind that your income and guaranteed super contributions may increase over this time period.

Giving your super a boost

It’s never too early or late to think about topping up your super. Putting in a little extra now can make a difference in the future.

Salary sacrificing might be an option, while bringing all your super together into one fund can help to manage fees that you might be paying.

Check the Australian Taxation Office (ATO) website for details about the latest contributions caps or talk to an adviser to discuss strategies to help you work towards your financial goals.

Before you make a decision about your super, you should compare the costs, fees, risks and benefits of super funds. It makes sense to consider whether you can replace any insurance cover you may lose when you bring your accounts together, as well as any costs for withdrawing from other super funds and any investment or tax implications. This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. The Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. Past performance is not an indication of future performance. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank).