How much super do you actually need to retire?
How much super do you actually need to retire?
It's probably one of the most common questions we get asked.
And also one of the hardest to answer.
Why?
Because it's a bit like asking...
"How much fuel do I need?"
Well...
Where are you driving?
That's exactly the same with retirement.
Before we talk about super balances...
We need to know where you're trying to go.
This week a client asked me,
"James, what's the magic number?"
I smiled and said,
"There isn't one."
Because there are so many moving parts.
The age you want to retire.
How much you spend each year.
Whether you own your home.
Whether you'll receive the Age Pension.
How long you expect retirement to last.
That's why this question shouldn't start in your 60s.
It should start in your 30s.
The earlier you know the destination, the easier it is to build the roadmap.
If we look at what the Association of Superannuation Funds of Australia (ASFA) says, here's what a typical retirement looks like today if you own your home:
Comfortable Lifestyle
Single: $55,923 per year
Couple: $78,566 per year
Modest Lifestyle
Single: $36,434 per year
Couple: $52,473 per year
Based on those spending levels, ASFA estimates someone retiring at age 67 that wants a comfortable lifestyle would generally need around:
Single: $630,000 in super
Couple: $730,000 combined in super
These figures assume you'll also receive a part Age Pension.
Now here's the important bit.
Those numbers are averages.
What if you want to retire at 60 instead of 67?
What if you want to travel every year?
What if you only spend $50,000 a year?
Or perhaps you spend $150,000.
Suddenly the "magic number" changes.
That's why we don't start with the super balance.
We start with three simple questions.
We call it our 3W Retirement Framework™.
WHEN
When do you want work to become optional?
Not when you're forced to retire.
When you choose to.
WHAT
What does retirement actually look like?
How much do you want to spend?
Will you travel?
Buy a caravan?
Help the kids?
Spend weekends fishing?
Everyone's retirement looks different.
WITH WHAT
How will you pay for it?
Super.
Investments.
Property.
Savings.
Sale of a business or farm.
Future contributions.
The Age Pension.
This is where we bring all the pieces together.
One of my favourite quotes says:
"If you don't know where you're going, any road will take you there."
Retirement works exactly the same way.
Most Australians ask:
"How much super do I need?"
We think there are better questions.
When do I want to retire?
What lifestyle do I want?
With what resources will I fund it?
Once you know those answers...
Everything else becomes mathematics.
Retirement isn't about reaching a number.
It's about designing a life.
If you're wondering whether you're still on track or you've never actually worked out your own retirement number, Contact us or SMS 0483 937 777 with the word RETIRE.
We'll help you answer the three questions that matter most.
Talk soon.
Reading is helpful. Having a plan is better.
Book your free 30-minute Discovery Session and let’s build a strategy that fits your life.
7Wealth Pty Ltd ABN 44609210246 is a Corporate Authorised Representatives and is authorised throughCobalt AdvisersPty Ltd ABN 64 628 654 099 who is an Australian Financial Services Licensee 512550. 7Wealth Pty Ltd is a Credit Representative ofAustralian Finance GroupLtd ABN 11 066 385 822 (AFG) Australian Credit Licence 389087.
This blog contains information that is general in nature. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Cobalt Advisers Pty Ltd nor their directors, employees or authorised representatives, do not give any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document.
