Calculating how much money you need to retire can be quite complex. Everyone’s circumstances are different and therefore everyone’s monetary requirements upon retirement are different.
That being said, we are here to give you the best advice we can and to help you determine roughly how much money you’ll need for your retirement, based on your individual needs.
At Aspiri, we are passionate about empowering our clients to have an exceptional lifestyle through a comprehensive approach to holistic advice, investments, super, and wealth management.
We have extensive experience helping:
- High-net-worth individuals
We help people build wealth, enjoy what they’ve worked hard for, and leave a legacy they can be proud of. Contact us today!
How much money do you need to retire comfortably?
The total amount of superannuation you will need depends on a few different vital factors:
- The type of lifestyle you expect
- Any large outgoing expenses (renovations, travel, medical costs, helping children etc.)
- Whether you’re single or in a couple
- Your life expectancy
From here, we can see that there is no one-size-fits-all when it comes to retirement. Before determining how much money you’ll need for your retirement, it is a good idea to see how much you will have if you continue on the trajectory you’re already on, and from there determine whether you need to change anything in order to live the retirement you desire.
How to calculate how much super you’ll have when you retire
The easiest way to calculate the amount of super you’ll have when you retire is to use the moneysmart.gov.au retirement planner. With this planner, you can input your and your partner’s financial information (if applicable), and the calculator will let you know how much super you will have at your desired age of retirement. Now let’s see if that number is close to what you’ll need to live the retirement lifestyle you want.
How to calculate the amount of super you’ll need to live the life you aspire to
Planning your retirement can take a lot of thought and requires many serious decisions. That’s why hiring a financial advisor with expertise in superannuation advice can pay dividends in the long run – so contact Aspiri today, and let us help you live the life you aspire to.
That being said, there are a variety of tools out there that can be used to determine roughly how much you’ll need when you retire. The first step in calculating the amount of super you’ll need is to determine your retirement timeline.
What does your retirement timeline look like?
A retirement timeline is a personalised plan that indicates when an individual will retire and how they will fund their retirement. The timeline begins with your current age and extends to your projected retirement age.
From this, we can see that thinking about retirement as early as possible can have great benefits further down the road, as there’s much more time to implement savvy saving habits and make investments that can set you up for a comfortable retirement. The later you leave it, the less time you’ll have to accrue capital and set yourself up.
So if you’re in your 20s you generally have plenty of time to start saving, but if you’re in your 40s or 50s and are just starting to plan your retirement, you have some serious planning to do! Regardless of your situation, reaching out to a qualified financial advisor is a great idea as we can help you maximise your savings, so contact us today.
Now that you’ve determined roughly how long you have to save, let’s look at a few of the guidelines that can help inform you how much you’ll need.
The two-thirds rule
The two-thirds rule states that if you own your own home, you’ll need roughly two-thirds (67%) of your current income in order to maintain a similar standard of living in retirement. Let’s look at an example.
If Steve makes $100,000 p.a., then he will need 67,000 a year during his retirement in order to be comfortable. This includes his savings and any income generated after retiring such as rent from another property he owns, any profit derived from selling and downsizing his home, interest on savings, as well as any money earned from the Age Pension, etc.
Multiple of 20 rule
When determining how much income you need, you need to work out how much capital both inside or outside of super is necessary to support your lifestyle. To do this, we use the multiple of 20 as an indicative guide.
For example, if you need $50,000 to be funded from your investments to support your lifestyle, then as a rule of thumb, you will need approximately $1,000,000 in investable assets outside the family home.
This figure can be adjusted depending on your circumstances, the risk profile of your investments and the longevity of your expected retirement savings. If you receive access to other benefits then you may need less money from your investments.
The ASFA Retirement Standard
The Association of Super Funds Australia (ASFA) provides a retirement statement that can be a helpful guideline for those looking to retire.
ASFA Retirement Standard | Annual living costs | Weekly living costs |
Couple – modest | $43,250 | $828 |
Couple – comfortable | $66,725 | $1,278 |
Single – modest | $30,063 | $575 |
Single – comfortable | $47,383 | $907 |
Aspiri can help you make the most of your retirement savings
At Aspiri, we have extensive experience in wealth management for retirees, and we can work with you to ensure that you not only have a comfortable retirement but that your retirement savings outlive you and provide for your family even after you’re gone.
Our financial planners will work with you to determine exactly how long your money is going to last and can provide you with options in which you can extend your money’s lifespan. So contact us today and let’s get you the retirement you deserve.
Aspiri Financial Services Pty Ltd (ABN: 25 090 764 444) (“Aspiri”) holds an Australian Financial Services Licence issued by the Australian Securities and Investments Commission (AFSL No: 384486).
This material is issued by Aspiri and is general in nature, and does not constitute advice. This information does not take into account your personal objectives, circumstances, financial situation or needs. We strongly recommend you seek independent professional advice, including but not limited to speaking to a licensed financial planner and/or tax advisor, before opening an account with us and/or acquiring our services/products.
Aspiri does not give any warranty as to the accuracy, reliability or completeness of information, which is contained herein, except insofar as liability cannot be excluded. Past performance is not a reliable indicator of future performance.
Before you invest in any products referred to in this material, you should use our Financial Services Guide (FSG) and other relevant disclosure documents, including the relevant Product Disclosure Statement. Fees, charges and commissions apply.
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