Planning for a Comfortable Retirement
How much Super do you really need for retirement
When it comes to retirement, it's no secret Australians are facing a tough challenge. With the cost of living on the rise, the gap between what we have saved and what we actually need for a comfortable retirement is startlingly wide. But just how much do we need in our superannuation to retire with peace of mind?
Vanessa Stoykov, a renowned money educator and finance expert, points out that a whopping 80% of Australians are not on track with their retirement savings. The key, according to Stoykov, is to begin saving as early as possible and, for those already advancing in years, to act quickly and decisively.
So, What's the Magic Number?
The Association of Superannuation Funds of Australia (ASFA) sets the benchmark for a comfortable retirement at $535,000 for singles and $640,000 for couples. Unfortunately, the reality for most is far from this ideal, with average super balances lingering around $286,800 as retirement age approaches.
ASFA's recommended milestones by age are as follows:
40-year-olds: $164,000
45-year-olds: $219,000
50-year-olds: $285,000
55-year-olds: $360,000
60-year-olds: $449,000
Canstar's data supports these figures, suggesting similar targets for each decade of life.
Living Costs in Retirement
Stoykov highlights that living a modest retirement requires about $28,000 per year for singles and $40,000 for couples. However, for a bit of luxury and comfort, those figures jump to $42,000 for singles and $62,000 for couples. This assumes you're mortgage-free, which is increasingly challenging for many Australians.
How Much Should You Be Saving?
Stoykov's rule of thumb is to save 10% of your income in superannuation, especially if you're self-employed. It's all about the balance of 'now versus later' - the small sacrifices you make today could lead to a significant impact on your future comfort.
The Sobering Reality for Older Australians
Those in their 60s face the most considerable challenge, having spent a decade of their working lives without superannuation contributions. The gap between the ideal and actual savings is most significant for this demographic.
Gender Disparity in Super Savings
Women, on average, retire with significantly less in their superannuation accounts compared to men, a disparity largely driven by career breaks for child-rearing and the lingering gender pay gap.
A Word of Caution: Don't Rely Solely on the Government
With the uncertain economic landscape, Stoykov urges Australians not to rely on government pensions as a surefire backup plan. Instead, she advises taking control of your super savings and regularly checking your balance through your super fund's app.
In essence, the road to a comfortable retirement requires discipline, foresight, and an understanding of the financial demands of your golden years. It's about making informed choices now to secure the lifestyle you desire later. So, ask yourself, are you doing enough for your future self?