Planning for retirement is one of the most important steps you can take to ensure a financially secure future. After years of hard work, you deserve a retirement where you can enjoy your time without constantly worrying about money. But how can you ensure your income lasts through retirement, especially with unexpected expenses and the rising cost of living in Australia?
At LIFE Financial Planners in Perth, we’re here to guide you through the essential steps in creating a simple and effective retirement income plan. Exploring the key factors influencing common retirement needs, providing insights and examining how your retirement costs may vary.
The ASFA Retirement Standard
The Association of Superannuation Funds of Australia (ASFA) offers a reliable framework known as the Retirement Standard, which provides benchmarks for what constitutes a “comfortable” and “modest” retirement based on annual living expenses.
As of the June 2024 quarter, the estimates are:
Comfortable Retirement:
- Singles: $52,085 per year
- Couples: $73,337 per year
Modest Retirement:
- Singles: $33,134 per year
- Couples: $47,731 per year
If you are aiming for a “comfortable” lifestyle, the ASFA recommends savings of:
- $545,000 for singles
- $690,000 for couples
These figures assume you own your home outright and are eligible for a partial Age Pension to supplement your income.
Average Super Balances in Australia
Before you begin planning for your retirement, it’s helpful to understand how your superannuation balance compares to the national averages. According to the Australian Bureau of Statistics, here are the median super balances by age:
| Age Group | Men (avg.) | Women (avg.) |
| 25-34 years | $42,100 | $34,500 |
| 35-44 years | $107,700 | $76,900 |
| 55-64 years | $326,200 | $246,300 |
For many Perth locals, these average balances may not meet the benchmarks needed for a comfortable retirement. But the good news is, there are proactive steps you can take to close the gap and put yourself on track for a secure retirement.
How Much Super You May Need to Retire on $50,000, $70,000, $90,000, or $100,000 a Year?
Planning your retirement savings starts with understanding your desired annual income in retirement. Below is a guide based on retiring at different ages and living off varying annual incomes:
| Annual Income | Retirement Age 60 | Retirement Age 67 |
| $50,000 | $831,748 | $665,666 |
| $70,000 | $1,164,447 | $931,932 |
| $90,000 | $1,497,146 | $1,198,198 |
| $100,000 | $1,663,496 | $1,331,331 |
The above figures assume your savings will need to last until age 85. Retiring later requires less savings, as your super is spread across fewer years. It’s important to consider lifestyle adjustments and long-term goals when determining your retirement age and income.
How to Work Out How Much Money You Need for Retirement
Calculating your retirement number is essential for ensuring a comfortable and secure future. It involves evaluating three key factors:
The Annual Cost of Your Lifestyle in Retirement
Start by picturing your ideal retirement. Do you envision extensive travel, frequent dining out, or perhaps a simpler life closer to home? If you’re renting, this will also have a significant impact on your budget. Think about these three categories of expenses:
- Essentials: Food, utilities, transport, and basic healthcare.
- Nice-to-Haves: Dining out, local holidays, and hobbies.
- Luxuries: Overseas travel, caravans, or major home renovations.
By creating a detailed retirement budget, you’ll establish a realistic savings goal that truly aligns with your dreams for retirement.
When You Want to Retire
The age at which you choose to retire plays a crucial role in how far your superannuation will stretch. Retiring earlier means your super needs to last longer while delaying retirement provides more time for contributions and investment growth. Consider your health, career aspirations, and lifestyle preferences to determine the best time for you to retire.
Your Life Expectancy
Australians are living longer than ever, meaning you could be looking at a retirement lasting 20–30 years, or more. It’s essential to plan for longevity, ensuring your savings can support you through the years ahead. Online calculators or a consultation with a financial planner can help you determine an appropriate life expectancy, providing a solid foundation for your retirement strategy.
At LIFE Financial Planners, we’re here to help you calculate your retirement number and ensure your plan is designed with your unique needs in mind. We’ll work with you to make sure your retirement goals are not just dreams, but a reality.
The Perth Perspective
Living in Perth comes with its own set of advantages that can have a significant impact on your retirement planning. From relatively affordable property prices compared to cities like Sydney and Melbourne to a high standard of living and access to an incredible array of outdoor activities, Perth offers a lifestyle that can influence your retirement budget in a positive way.
- Housing Costs: If you own your home, your living expenses will be far lower than those renting in Perth’s suburbs, which means you have more flexibility in managing your retirement savings.
- Transport: With Perth’s extensive public transport system, the need for a car is reduced, saving you money on maintenance, fuel, and insurance.
- Lifestyle Choices: Your personal spending habits will play a key role in determining your retirement needs.
The Bottom Line
Planning for your retirement doesn’t have to be overwhelming. At LIFE Financial Planners, we understand that everyone’s retirement needs are different, which is why we take a personalised approach to create a plan that works for you.
Whether you’re just starting to think about retirement or already in the planning stages, taking control of your superannuation and overall retirement strategy is one of the most important steps you can take. Your retirement, your plan –let’s make it a reality.
Contact us today and let’s create a tailored retirement plan that will give you the peace of mind to truly enjoy your retirement years.
PHONE 08 9322 1882