One of the most asked questions we get from individuals and couples approaching retirement is, “How much money do I need when I retire?”.
It all depends on factors such as;
- The lifestyle you wish to live in retirement
- When you wish to retire
- Eligibility for government entitlements
- Whether you wish to leave any money behind to loved ones
What lifestyle are you accustomed to?
A key factor which will impact what you need set aside for retirement is the lifestyle you want. For example a couple living a fairly moderate lifestyle may require $800 per week to live, whilst a couple that wishes to enjoy a more luxurious lifestyle may require $1,100 per week. The latter couple will therefore be living off close to an extra $16,000 per annum and these funds will have to be accounted for when planning their retirement to make sure that lifestyle is both achievable and sustainable.
When can I retire?
The age you retire is up to you however a lot comes down to being able to fund your lifestyle in retirement. If you were born before July 1960 the earliest you can access your superannuation is age 55 and it goes without saying that the earlier you retire the longer your retirement funds will have to last you. The life expectancy for a 55 year old is approximately 82 years for males and 86 years for females (Australian Government Actuary). So what this really means is that, according to life expectancy statistics you are likely to have to make your funds last these timeframes.
Clients may be eligible to receive Centrelink entitlements based on achieving Age Pension age and meeting the necessary means tests. As of September 2011 the Age Pension provides an annual income starting at approximately $17,914 for singles and $27,009 for a couple depending on your situation and eligibility. It is important to remember that the Age Pension only provides a very basic income and is unlikely to provide a comfortable retirement, it is therefore important that you build up super or investment savings to help supplement your lifestyle.
These factors are all important considerations that need to be taken into account when thinking about retirement and the earlier you start planning the more prepared you will be. Find out more information about Retirement or contact PFG today to speak to a Financial Planner about your individual goals and circumstances.