How much you need

There are lots of theories for working out how much super you’ll need in retirement.

The ASFA Retirement Standard benchmarks the amount needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It’s updated quarterly and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle. According to the ASFA Retirement Standard (September quarter 2019, national), you’d need the following lump sums to have a comfortable retirement lifestyle:

Category Savings required at retirement
Comfortable lifestyle for a couple $640,000
Comfortable lifestyle for a single person $545,000

But, how much will you spend in retirement?

If you're aged 65-85:

  Modest lifestyle Comfortable lifestyle
  Single  Couple Single Couple
Total each year $27,913 $40,194 $43,787 $61,786

If you're over age 85:

  Modest lifestyle Comfortable lifestyle
  Single Couple Single Couple
Total each year $26,450 $37,767 $41,613 $57,696

It’s important to remember that as you move through retirement, your needs will change. In the first few years of retirement, you might spend a lot on travel, still buy nice clothes, upgrade cars, go out for lunches, have hobbies etc, but as you get further into retirement, you might find you spend less on these types of things.

What’s the difference between comfortable and modest retirement lifestyle?

A modest retirement lifestyle is considered better than being on the Age Pension, but still only allows for fairly basic activities.

A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

The below table, developed by ASFA, shows you the lifestyle difference between a comfortable retirement, modest retirement and living on the Age Pension.

Both budgets assume that the retirees own their own home outright and are relatively healthy.

Comfortable retirement Modest retirement  Age Pension
Replace kitchen and bathroom over 20 years. No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom. No budget to fix home problems like a leaky roof.
Better quality and larger number of household items and appliances and higher cost hairdressing. Limited number of household items and appliances and budget haircuts. Less frequent hair cuts or getting a friend to cut your hair.
Can run air conditioning. Need to watch utility costs. Less heating in winter.
Restaurant dining, good range and quality of food. Take out and occasional cheap restaurants. Only club special meals or inexpensive takeaway.
Fast internet connection, big data allowance and large talk and text allowance. Limited talk and text, modest internet data allowance. Very basic phone and internet package.
Good clothes. Reasonable clothes. Basic clothes.
Domestic and occasional overseas holidays. One holiday in Australia or a few short breaks. Even shorter breaks or day trips in your own city.
Top level private health insurance. Basic private health insurance, limited gap payments. No private health insurance.
Owning a reasonable car. Owning a cheaper more basic car. No car or, if you have a car, it will be a struggle to afford repairs.
Take part in a range of regular leisure activities. One leisure activity infrequently, some trips to the cinema or the like. Only taking part in no cost or very low cost leisure activities. Rare trips to the cinema.

Are you on the right track to achieve the retirement lifestyle you want?

To find out, follow these 3 simple steps:

  1. Log in to Tasplan Online to check your current super balance.
  2. Try MoneySmart's Retirement planner. This will help you find out how much you’re likely to have at retirement and how long your super may last.
  3. Finally, if you’re not happy with the balance you see, you can look at ways to boost your super. Or, you could chat to a Tasplan financial planner for tailored advice you can trust.


Boost your super  Chat to a financial planner

 

  • Tasplan Super Tasplan Super ASFA Retirement Standard

    All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent. These figures assume that the retiree will draw down all their capital and receive a part Age Pension.

    The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there’s a drawdown on capital over the period of retirement. The ASFA Retirement Standard is meant as a guide only and doesn’t take into account individual needs and circumstances.