Having enough money in superannuation to provide for a comfortable retirement should be high on your list of priorities, no matter what age you are. Unfortunately however, for many people it won’t be that easy, with information provided by the Westpac Bank showing that at age 70, only 1 in 5 Australians will have any superannuation left.
While the numbers may cause quite a shock, the underlying theme has been around for a long time; a large number of Australians will not have enough money saved to enjoy a comfortable retirement.
What constitutes a ’comfortable retirement’?
So just what is a comfortable retirement? Well, lifestyle needs are a personal thing; what’s comfortable for some may be inadequate, or even affluent, for others, depending upon what they are used to and what their goals are..
The Association of Superannuation Funds of Australia (ASFA) has attempted to define the amount of income required to live a comfortable retirement through its regularly revised ASFA Retirement Standard. (http://www.superannuation.asn.au/resources/retirement-standard)
Based on the costs of a range of household essentials, as well as leisure activities, it has arrived at the following figures:
Modest Lifestyle – Single $21,746 per year
Modest Lifestyle – Couple $31,519 per year
Comfortable Lifestyle – Single $40,121 per year
Comfortable Lifestyle – Couple $54,954 per year
To live a modest lifestyle, as defined by the income needed above, the maximum government Age Pension will go most of the way to meeting this target (currently $19,468.80 a year for singles and $29,354.00 a year for couples). However, it is likely major travel plans will need to be shelved, as there is not much fat left over when living off the pension.
The importance of building a retirement nest egg
If you intend to live on more than the government Age Pension, then you need to generate income from your own retirement savings, and the most tax effective way to do this is by boosting your superannuation savings before you retire.
Whilst the 9 per cent Superannuation Guarantee enables Australian workers to build a retirement nest egg, for most of us this alone is not adequate to fund a comfortable retirement. So, what can you do to get yourself on track?
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