How much is enough for my retirement?

After 15 years as an adviser, I can tell you that planning for retirement is different for everyone. We all have a different set of objectives and resources available for both financial and life investments, and varied tolerance for risk when investing.

As retirement gets closer it becomes overwhelming. You need to look at all the options on hand and develop a plan of attack that works for you. Being realistic and thinking about outliving a nest egg and going into aged care must be part of the plan. We move from pre-retirement where we want to maximize our balance, to retirement where we want to maintain our capital for income and legacy.

Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” Being flexible is mandatory in this day and age.

If I had a dollar for every time a client had asked me how much money I need in retirement, I would be retired!!! It all depends on the level of comfort (aka expenses) you are used to. I am fortunate to work from all four of our offices and I can tell you there is a definite difference in level of comfort. It costs me more to buy my lunch in the Mornington office than it does in the East Brunswick office.

First, we need to look at what our expenses are likely to be. By this time all debt and capital (renos, cars etc) have been taken care of so, it is now about living and enjoying life.

What do the researchers say?

Cashflow

According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, single people will need $45,962 pa and couples 64,771 a year based on you being a home owner.

If we look at the age pension a single person receives 25,678 and a couple 38,708.80pa plus supplements.

Lump Sum

The Association of Superannuation Funds of Australia’s Retirement Standard says to have a ‘comfortable’ retirement, single people will need $545,000 in retirement savings, and couples will need $640,000 based on you being a homeowner.

The Retirement Budget & Cashflow

This is your current budget, which considers all your present-day income and expenses. While you should have some idea as to what you will need to save per month based on your retirement goals, you also need to make sure that you have that money to save. It is a good idea to put retirement savings as a line item in your budget, just like food and shelter costs, so that you can set aside those funds every month.


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First published in Peninsula Essence, Peninsula Finance Experts – June 2022