How much money do I need to retire? It’s a question that’s on the minds of many Australians. According to the AMP 2022 Financial Wellness report, retirement stress has been increasing with 21% of working Australians expressing their lack of confidence in being able to achieve their ideal retirement lifestyle.
You’ve probably heard a lot of different numbers if you’ve been thinking about your retirement. The common adage is that you’ll need at least $1 million saved to live comfortably, but that’s not true for everybody. The amount of income you need in retirement will really depend on a number of factors, like your retirement goals, current income sources, assets and life circumstances. Taking some time to do some financial planning ahead of your retirement can help to ensure that you have enough to maintain the lifestyle you want.
Getting started on planning your future
When planning your retirement, it’s a good idea to set some benchmarks. When do you plan to retire and how long will you be retired for?
In Australia, the average life expectancy is 85, while the average age of retirement is 55 – this means you would need enough income to support you for another 30 years after retirement.
According to the The Association of Superannuation Funds of Australia (ASFA), The minimum annual cost of a comfortable retirement for singles is $48,266 while for couples it would be $68,014.
For most retirees, a comfortable lifestyle would mean being able to maintain a lifestyle that allows for frequent leisure activities or hobbies and the occasional domestic and international holidays.
Whereas, if you’re looking to have a modest lifestyle in your retirement, the ASFA estimated a budget of $30,582 for singles and $44,034 for couples. This budget enables retirees to live slightly above the Age Pension and account for basic health insurance, infrequent exercise, leisure and social activities.
It is important to note that these budgets assume retirees are healthy and own their own home outright. Factors such as debt, medical bills and other life circumstances will contribute into the overall budget you need for a retirement lifestyle that you want.
What is the average Australian super at retirement?
The balance in your Australian Super account will depend on your salary. However, according to the ASFA, the minimum Superannuation balance required for a comfortable retirement is $545,000 for a single person and $640,000 for couples.
If you noticed that your own Superannuation balance is not where you want it to be, you can check your Superannuation account to see if you are paying any extra fees and if the insurance you are using is suitable for you. It is also worth looking for any Super fund that has been lost over the years.
Planning an affordable retirement
Living in a retirement village can also be an affordable option to maintain a secure and happy retirement. Retirement villages offer a variety of options that suit your budget and lifestyle needs, with different payment models such as the Deferred Management Fee (DMF) payment model, enabling you to make only part of the payment when you enter and pay the rest once you leave.
Some prefer an alternative payment model, such as the pay-as-you-go model which enables retirees to retain their family home and rent it out, using the income to pay the accommodation costs of living at the village.
When choosing the right retirement village for you, consider your lifestyle preference and hobbies that you want to pursue. This way, you get more out of your investment and rather than spending the money to pursue your interests outside, it might be worthwhile choosing a village that offers what you prefer. Since each village comes with its own benefits and amenities that would suit different wants and needs, choosing the right village can ensure you enjoy your golden years.
If you’re interested to find out more about what it’s like to live in a retirement village, enquire today to get in touch with our staff.