How much retirement income will you need?
It's tempting to answer this question with another: “How long is a piece of string?'.
But seriously, to work out how much super you'll need to enjoy a comfortable retirement you should start by asking yourself a few (sensible) questions. These include:
- What does ‘comfortable' mean to me?
- What do I need to budget for?
- What can I live without?
- What level of income do I need to cover everything?
- How much do I have invested already?
- Do I need to top it up?
- At what age do I plan to retire?
- What's my life expectancy from this point?
There are three key things to think about:
- Having enough savings to begin with;
- Investing wisely to ensure good returns; and
- Making your savings last as long as possible.
As a rough guide, people usually need at least 60% of their current annual income for retirement. So if you're earning $60,000 now, you'll need at least $36,000 as your retirement income.
And, at the moment, life expectancy for Australian males is 84 years and 88 for females. So, if you plan to retire at 65, your retirement savings will need to last you around 20 years if you're a male and longer if you're a female.
For a guide to how much super you need, go here.
Good advice
You can see that this isn't a simple matter. We recommend you seek help from a financial adviser about how much super you'll need in retirement. They can also offer you good advice on:
- maximising your returns from existing savings and investments
- strategies to build your superannuation
- strategies for maximising your retirement income
and much more.
If you don't have an adviser we can help you find one.