How Much do I Need to Retire?
Disclaimer: The information in this article contains general advice and is provided by Hood Sweeney Securities Pty Ltd, AFSL 220897, ABN 40 081 165. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation, and needs. Please refer to our Financial Services Guide for contact information and information about remuneration and associations with product issuers.
For many people, the issue of how much they need to retire is like asking 'how long is a piece of string'?
While there are countless circumstances to consider, the Association of Superannuation Funds of Australia (ASFA) regularly calculates this data and based on their calculations they estimate a couple aged 65-84 require $70,482 per annum for a “comfortable lifestyle”.1
ASFA estimates that a combined superannuation balance of $690,000 would be required at age 67 to fund this “comfortable lifestyle”. This calculation takes into consideration government support, such as the Age Pension at current rates and projected increases based on current legislation, into the future.
However, with an ageing population, and pressures on government expenditure, the Age Pension may not be as generous 20 years into the future.
Daman Arthur, Representative and Senior Financial Planner of *Hood Sweeney Securities Pty Ltd (AFSL 220897, ABN 40 081 455 165) says: “The ASFA calculation does not consider one-off expenses relating to renovations, new cars, or large holidays. Very quickly, a comfortable lifestyle in retirement becomes a number specific to each person or couple’s objectives. This also doesn’t take into consideration retiring before age 65”. In short, these calculations are heavily dependent on many assumptions, and reality can turn out much differently.
Daman Arthur added "your current expenditure is a good basis to begin to determine your retirement income needs. Then reducing this for debt repayments, school fees or work-related expenses, provides a better indication of your estimated annual retirement cost of living".
A Financial Planner can provide recommendations for strategies to build wealth to provide for your retirement goals and objectives.
There are many ways to build wealth, both inside and outside of superannuation. However, to obtain the benefits of compounding returns, it is better to have a plan in place and start early.
According to research from the Financial Advice Association of Australia (FAAA) conducted by research consultancy MYMAVINS, Australians with an active relationship with a financial planner are not only financially better off than unadvised Australians – they also have a better quality of life.2
There are unknowns in everyone’s future - ranging from taxation and inflation to life expectancy: a good Financial Planner will keep informed of these changes and regularly review your goals and objectives with you and recommend adjustments to the plan.
To discuss your financial goals and objectives, contact a Representative Financial Planner at *Hood Sweeney Securities Pty Ltd on 1300 764 200 or email info@hoodsweeney.com.au to make an appointment.