It’s OK if you’re not there yet, but it’s helpful to know what we should be working towards, right? Well, apparently a couple needs almost $63,000 a year to retire comfortably.
New data from the Association of Superannuation Funds of Australia shows a couple in their mid-60s will spend $1204 a week for a comfortably retired existence, and a single person needs $851.
It’s pretty evident that retirement is something you can only do comfortably with a healthy amount of savings, but when given to us in figures, it can feel kind of daunting.
Retirement costs have climbed as surging petrol, insurance and domestic travel prices continue to rise, with no sign of slowing down. Petrol prices rose 8.7% in the March quarter, domestic travel prices are up 3.9% each year, and health insurance premiums have been rising since October, according to ASFA’s new Retirement Standard report.
Apparently, according to the ASFA, only a quarter of Australians that are retiring today have enough savings to afford that.
When I think of retiring, I look forward to holidaying in style, having extravagant dinner parties with lifelong friends and maybe buying a house in Italy. But what does a retiree actually need?
The report states that a typical, comfortable retirement will include a range of leisure activities, a good car, private health insurance, good clothes, electronic equipment, frequent domestic and occasional international travel… all of which became 0.4% more expensive in the last quarter.
ASFA deputy CEO Glen McCrea said this lifestyle – and the $62,828 a couple now needed to afford it – was “not opulent”.
“People aren’t buying luxury watches or flying first class – it’s about having your life, going to the club, having a drink and catching up with your friends,” he said.
But the super balance required for this – when combined with a part age pension – is significant.
“You are looking for a couple at about $640,000 and then $545,000 for a single person.”
Although that may be an unfathomable amount of money to young people at the start of their careers, it’s actually not totally unrealistic.
If you’re worried – don’t be, there’s time – it’s good to remember that our pension here in Australia is pretty good and remains a valuable backup.
JBS Financial Strategists CEO Jenny Brown assures us that a homeowner couple could have super and other assets worth $401,000 and still get a full pension. A part pension stops when assets reach $880,500.
However, it’s never too early to start saving money. Even just a little bit of your paycheque will help, especially if you’d like to be those blissful retirees that spend their days baking in the European sun, drinking excellent wine and checking things off their bucket list. No pressure.