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How much do I need for life after work?
How much do I need for life after work?
We all have different ideas about the lifestyle we want to lead in retirement. You may be happy to lead a quiet life, centered on the home and family, and perhaps working on a part-time basis. Or you may wish to travel extensively, take part in exciting pursuits and live solely off your savings and superannuation.
Longer life expectancies
What must be remembered is that we are all living longer.
The average life expectancy for women is 82 years and men 77 years, with these figures expected to increase to 86 and 81 respectively.1 If you intend to retire at age 60 therefore, you can expect to fund approximately twenty years in retirement.
How much is enough?
- Research commissioned by ASFA (Association of Superannuation Funds of Australia) found 8 out of 10 individuals estimate their required minimum annual income in retirement will be $20,000 each.1
- About 6 out of 10 believe they will need $30,000 or more.1
The current level of compulsory employer Superannuation Guarantee (SG) payments is 9% of salary. According to ASFA, if you receive an average salary, after 30 years employment this would provide a lump sum of $167,000. This would mean payments of $19,800 per annum in retirement – well below average expectations.1
ASFA indicates for most people, a savings target of at least 12-15% of salary over 30 years might be appropriate to achieve adequate savings.1
Achieving your goal
To receive $30,000 a year in retirement income, you would require at least $370,000 in superannuation savings!
This figure does not take into account ‘other’ savings and the income these might provide in retirement. However, remember the tax concessions available in an allocated pension or annuity environment, are not generally available in other investment environments.
1Fact sheet #5 ‘An adequate retirement income,’ ASFA – www.superannuation.asn.au – 3 February 2004
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