Last week, I discussed the most common retirement questions our members ask during strategy consultations with our advisers. One of the big ones is: ‘Do I have enough? Sometimes that thought is closely linked to ‘Do I have enough – yet?’
The real question isn’t just about whether it’s enough, it’s more likely, ‘How can I make my savings last?’
Your superannuation balance and investments, spending levels, Age Pension entitlements, and investment choices will all play a role in sustaining your income over time.
Understanding retirement standards
The Association of Superannuation Funds of Australia (ASFA) provides guidelines to help individuals plan for retirement, which they update quarterly. As of the September quarter in 2024, ASFA’s Retirement Standard suggests that the following is needed:
For couples:
Comfortable lifestyle: Annual spending of $73,031, requiring approximately $690,000 in superannuation savings at retirement.
Modest lifestyle: Annual spending of $47,475, requiring approximately $100,000 in superannuation savings at retirement.
For singles:
Comfortable lifestyle: Annual spending of $51,814, with a recommended superannuation balance of around $595,000.
Modest lifestyle: Annual spending of $32,930, requiring approximately $100,000 in superannuation savings at retirement.
These figures assume retirees own their homes outright and are eligible for a part Age Pension.
By comparison, the full Age Pension rates are currently:
Couples (combined): $44,855 per year
Singles: $29,754 per year.
ASFA provides detailed budgets for both of these ‘modest’ and ‘comfortable’ retirement lifestyles. A modest lifestyle allows for a slightly better standard of living than the full Age Pension, but still only covers basic needs – requiring a modest superannuation balance of $100,000.
In contrast, a comfortable lifestyle requires significantly higher super savings to afford a higher standard of living, with additional spending on leisure, private health insurance, household upgrades and occasional travel.
According to ASFA’s latest update on superannuation balances, around 30% of retirees currently meet or exceed the comfortable standard. Their research indicates that, by 2050, approximately 50% of retiree households will reach this level.
