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How much super do I need to retire?

How much super do I need to retire? This is a question I hear quite a lot as a financial adviser. The short answer is: it depends. There really is no magic number.

It depends on how much money you spend. It depends if you have a home paid off or if you rent, which area you live in. If you want to retire before aged 60 or wait until over 70. If you want to keep working part-time. If you plan to travel overseas, or via caravan. Do you want to renovate your home? Then it also depends on the big unknowns such as what your medical costs might be. If you need to move into aged care and how long will you live.

Will I get aged pension?

Some people in Australia confuse the age in which you are eligible for aged pension with when you can retire because everyone can retire at age 50 (if they want to) and have investments to fund it. The reality is that many people these days may not be eligible for aged pension when they retire anyway. There are strategies that you can implement to maximise the social security benefits you may be eligible for. Key tip – seek some financial advice.

How much do you spend?

The Association of Superannuation Funds Australia suggests that a couple aged 65 needs around $62,435 p.a. ($1,200 per week) for a “comfortable lifestyle”. Currently the aged pension is $37,013 p.a. ($711 per week) for a couple combined. Completing a budget is a starting point because it will give you an idea of how much you spend on an annual basis. Some people spend a lot less than $60k a year and some people spend a lot more! There are a range of free calculators available to assist in working out how your retirement is tracking.

Will I outlive my savings?

The great thing in Australia is that we do have the safety net of the aged pension (if eligible). Australians are living longer today than ever before because of improvements to medical science. If your parents are still healthy in their 90s then chances are you might live a long time too. Current life expectancy tables. This needs to be taken into account when you work out your number.

What can I do to improve my retirement?

The key with any retirement plan is starting as early as possible. Focus your energy on what you can control, e.g. savings rate, fees you pay, how you are invested. Work out your strategy (keep it simple) and set some goals around where you want to be. Then make a start. You can also download a copy of our free e-book with a few tips.

Key tip on working out how much super you need to retire is to get financial advice. You can reach out to us via justin@cpwealth.com.au