How much money do I need to retire with?

We often get asked this question and the answer sometimes surprises people as the answer may not be as much you think (or have read).

Many articles published in the media quote the ‘$1,000,000 figure’ as the ideal number. Given the average super balance, the $1,000,000 mark is a long way off for most people. However, a recent article “superannuation” published on caught our attention because it finally brought some balance to the discussion.

The Australian Institute of Superannuation Trustees has released a new paper, titled “Busting the $1 Million Retirement Myth” which finally (in our opinion) brought some balance to the discussion. The reality is that the majority of Australians will not need $1 million in their retirement nest egg to retire on.

Where does the $1m figure come from? Well, it’s based on someone fully self-funding themselves and takes no account of any Age Pension or other associated benefits provided to pensioners.

So how much do you need? Well, that is a difficult question to answer as everyone is different. But there are a number of things you need to consider. Firstly and most importantly, what does retirement look like to you? What will it cost to fund the basic cost of living? The ASFA Survey of retirees considers approximately $35,000 for couples as a modest lifestyle and up to $60,000 for a comfortable lifestyle.

Most of our clients find that the first 10 years of their retirement are their peak spending period. So whilst you might start out requiring a higher level of income, after a period of time most people generally start to slow down and thus tend to require less funds.

But what about holidays, a new car or house repairs? Do you want to leave anything behind for the kids or S.K.I (as they say – Spending the Kids Inheritance)? As you can see there are many different factors that come into play when considering the question of how much do I need?

So how do you know how much, come and talk to our partner Sage Financial Solutions. John and his expert team will be happy to take you through a complimentary session to show you what you can achieve and how your future might look.

Call the Sage Financial Team on 9445 2955 or email to arrange a 1-to-1 session. If you can’t come into the office they can do a ‘remote’ session on your home computer.

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Information in this article is true and correct as of 1 August 2017.

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