Have you ever sat down to work out exactly how much income you will need to live on each year and how many years your money will last into your retirement?
The Association of Superannuation Funds Australia (ASFA) publishes retirement budgets for various households based on a ‘modest’ or ‘comfortable’ lifestyle. These figures give someone looking to retire a really good indication of just how much money they will need each year.
Of course, how you need will vary depending on your own personal situation, and past experience tells us that members are likely to have greater living and lifestyle needs in the first ten years of retirement. This is because new retirees tend to be more active, they take holidays, renovate and want a new car.
What’s in the budget?
The most recent national figures released for the ASFA Retirement Standard show that, in general, a couple looking to achieve a comfortable retirement will spend $57,817 a year, while those seeking a ‘modest’ retirement lifestyle will spend $33,509 a year.
A modest retirement lifestyle is considered to be better than what the age pension will provide, but still only affords fairly basic activities.
A comfortable retirement lifestyle allows for a broad range of leisure and recreational activities; along with a good standard of living. On a comfortable retirement you could afford to purchase things like; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
ASFA’s weekly budget for various households and living standards (March Quarter 2014)
| Modest lifestyle – single | Modest lifestyle – couple | Comfortable lifestyle – single | Comfortable lifestyle – couple | |
| Housing – ongoing only | $63.75 | $61.19 | $73.88 | $85.65 |
| Energy | $43.58 | $57.87 | $44.22 | $59.97 |
| Food | $75.86 | $157.15 | $108.38 | $195.08 |
| Clothing | $17.58 | $28.54 | $38.05 | $57.08 |
| Household goods and services | $26.18 | $35.50 | $73.65 | $86.28 |
| Health | $39.58 | $76.39 | $78.52 | $138.59 |
| Transport | $96.80 | $99.54 | $144.25 | $146.99 |
| Leisure | $73.57 | $109.60 | $222.94 | $305.51 |
| Communications | $9.63 | $16.85 | $26.46 | $33.67 |
| Total per week | $446.52 | $642.64 | $810.36 | $1,108.83 |
| Total per year | $23,283 | $33,509 | $42,254 | $57,817 |
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 is a drawdown on capital over the period of retirement. Single calculations are based on female figures. All calculations are weekly, unless otherwise stated. Source:http://www.superannuation.asn.au/resources/retirement-standard
A financial plan with regular reviews can help
How well you manage your money in retirement can have a big impact on how long your money will last.
If you need help managing your money having a dedicated financial planner working with you, in both the good and bad times, is a great idea and can be cost effective.
By First State Super, firststatesuper.com.au