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How Much Superannuation Do You Need for Retirement?

Retirement planning is a crucial aspect of financial management for Australians. Many people often wonder how much they need to save in their superannuation account to retire comfortably. However, recent figures from the Australian Super Funds Alliance (ASFA) suggest that Aussies may not need as much in their superannuation account as they once thought to set themselves up for retirement.

The Minimum Recommended Amount for Retirement

According to ASFA’s latest retirement standard, the bare minimum balance one should have in their superannuation account before retiring is $100,000. This amount is recommended for singles and couples aged between 65 and 84. With this balance, a couple can expect a yearly spend of $45,106, while a single person can expect $31,323 per year. However, this figure is based on a “modest” retirement lifestyle, which rules out overseas holidays, frequent restaurant visits, and higher expenses for heating, cooling, and healthcare.

The Suggested Amount for a Modest Retirement

ASFA recommends that those who wish to retire “comfortably” should have at least six times the minimum balance in their superannuation account. For couples, this translates to a balance of $690,000, while singles should aim for $595,000. With this balance, a couple can expect to spend around $69,691 per year, while a single person can expect to spend $49,462 per year. This higher balance allows for a more comfortable lifestyle, including occasional holidays, better healthcare coverage, and more discretionary spending.

Factors Affecting Retirement Expenses

The discrepancy in the recommended retirement balances can be attributed to lifestyle choices and individual circumstances. ASFA Deputy CEO Glen McCrea points out that healthcare expenses tend to increase as people age, and comfortable retirement budgets should account for out-of-pocket medical and dental expenses. Additionally, the level of pension benefits one may receive from the government also affects retirement expenses. Couples who own their own home must have assets below $419,000 to receive the full pension, and the threshold increases to $954,000 for the part pension.

Different Perspectives on Retirement Expenses

Financial planners and experts have varying opinions on the recommended retirement balances. Some argue that ASFA’s guideline for a “comfortable” retirement may not be enjoyable for everyone. Some suggest that most couples would need $80,000 to $100,000 per year to maintain a modest lifestyle, considering bills, living expenses, and occasional holidays. Retirees should aim for at least one million dollars in their superannuation account to retire comfortably. Other financial advisors suggest that living in different parts of the country may require different retirement balances, with a ballpark figure of one million dollars per person for those living in cities like Sydney as the cost of living is higher.

Early Planning is Key

Regardless of the recommended retirement balances, Vogue Advisory Group cannot emphasize enough the importance of early retirement planning. We advise that planning for retirement should start several years before the desired retirement age. It is important to note that retirement planning is not a one-time event but rather an ongoing process that requires regular review and adjustment to ensure that your retirement goals are being met. As such, we recommend individuals make it a habit to review their retirement plan periodically and make necessary adjustments to ensure that they stay on track. Additionally, it is crucial to plan for and consider factors such as inflation, healthcare costs, and unexpected expenses when planning for retirement. By starting early, individuals can have a clear understanding of their financial situation and take steps to secure their financial future in retirement. Starting retirement planning early allows individuals to take advantage of compounding interest, investment opportunities, and other strategies to maximize their savings and set themselves up for a better retirement.

The content of this article provides a general guide to the subject matter. You should seek specialist advice about your specific circumstances.

How Vogue Advisory Group Can Help to Maximise Your Super

It’s important to keep in mind that retirement planning is not a one-size-fits-all solution. Your retirement plan should be tailored to your unique circumstances, goals, and risk tolerance. Our team of financial advisors can help you navigate through the complexities of retirement planning, so you can make informed decisions about your financial future.

We understand that retirement planning can be a daunting task, but it doesn’t have to be. Our team will take the time to educate you on the various investment options available, help you understand the risks and benefits associated with each option, and provide you with guidance on how to build a diversified portfolio that aligns with your long-term goals.

At Vogue Advisory Group, we believe that everyone deserves a secure and comfortable retirement. That’s why we’re committed to helping our clients achieve their retirement goals by providing them with the tools and resources they need to make informed financial decisions. So, whether you’re just starting to think about retirement or you’re already well into your retirement years, our team is here to help you navigate the complexities of retirement planning and ensure that you’re on track to achieving your financial goals. Contact us today to schedule a consultation and take the first step towards a secure and comfortable retirement.