What lifestyle are you planning for when you retire?
A lot of consideration and effort is required when it comes to planning retirement savings that may be years away.
One of the most important steps in planning to save for your retirement is figuring how much you will need to spend each year to live a comfortable lifestyle. Planning a budget to retire into the future can be a daunting task.
How much money will I need?
To support a comfortable lifestyle, the 2024 Association of Superannuation Funds of Australia’s retirement standard states that individuals around the age of 65 will need the following p.a. to retire:
- For couples: $70,806
- For a single person: $50,207
Both budgets assume that the retirees own their own home outright and are relatively healthy.
What is a comfortable or modest retirement lifestyle?
A comfortable retirement allows retirees to participate in a wide range of leisure and recreational activities and enjoy a high standard of living. This includes purchasing household goods, private health insurance, a decent car, fashionable clothing, electronic equipment, and even domestic and international vacations.
While a modest lifestyle is superior to the Age Pension, it only covers the basics.
|Top level private health insurance, doctor/specialist visits, pharmacy needs
|Basic private health insurance, limited gap payments
|No private health insurance
|Fast Reliable internet/telco subscription, computer/android mobile /streaming services
|Basic mobile, modest internet data allowance
|Very basic mobile and limited internet connectivity
|Own a reasonable car, car insurance and maintenance and upkeep
|Owning a cheaper, older, more basic car
|Limited budget to own, maintain or repair a car
|Regular leisure activities including club membership, cinema visits, exhibitions, dance/yoga classes
|Infrequent leisure activities, occasional trip to the cinema
|Rare trips to the cinema
|Home repairs, updates and maintenance to kitchen and bathroom appliances over 20 years
|Limited budget for home repairs, household appliances
|Struggle to pay for repairs, such as leaky roofs or major plumbing problem
|Regular professional haircuts
|Less frequent haircuts, or self-haircuts
|Confidence to use air conditioning in the home, afford all utilities
|Need to keep a close watch on all utility costs and make sacrifices
|Limited budget for home heating in winter
|Occasional restaurant meals, home-delivery meals, take-away coffee
|Limited meals out at inexpensive restaurants, infrequent home-delivery or take-away
|Only local club special meals or inexpensive take-away
|Replace worn-out clothing and footwear items, modest wardrobe updates
|Limited budget to replace or update worn items
|Very basic clothing and footwear budget
|Annual domestic trip to visit family, one overseas trip every seven years
|Annual domestic trip or a few short breaks
|Occasional short break or day trip in your own city
Assets test for age pension
The Australian government uses the assets test to determine if you are eligible to receive the Age Pension. This test also affects the amount you will receive in retirement.
Different types of assets are evaluated as part of the assets test. The value of your assets, as well as whether you own a home or are in a relationship, will determine the payment amount.
The assets test limits exist to ensure that only those who meet the criteria receive the Age Pension.
Make an appointment today
Our wealth creation representatives can help you plan to retire and be financially secure, make an appointment with our Wealth Creation team today.