A great feature of working is the idea of getting certain benefits upon retirement. And this is even juicier in Australia thanks to superannuation requirements. Under current regulations, employers must deposit 9.5 per cent of your income into a specified fund that you can access upon retirement and meeting the preservation age.
However, while this provides some form of safety, thanks to changing times, it’s quite challenging to tell if the money will be enough to keep up with your lifestyle. As such, you might still be wondering how much money you’ll need to retire in Melbourne and live comfortably.
Well, we’ve got you covered. Dive in to find out.
When Do You Need to Retire?
First, there’s no specific age when you need to retire. As such, you can generally keep working as long as you want. However, most people tend to retire when they are about 60 years. And this is because this is the preservation age when they can get the funds from their super released (Australian Taxation Office).
Regardless, while your age is an essential factor, it’s not the only consideration for retirement. You’ll need to ensure you have enough cash and income-generating assets to last your life before retiring. And this is crucial because even after retirement, recurring expenses such as food, bills, home improvements, and leisure don’t just disappear.
As such, you’ll need to put all these considerations together before you decide to retire.
How Much Do You Need?
Generally, it will be impossible to give you a specific amount about how much cash you need to have stuffed up. And this is because financial circumstances and need vary. For instance, your retirement age might influence your fund requirement. Your family size and lifestyle will also inform your fund requirement.
However, generally, the ‘Retirement Standard’ published by the Association of Superannuation Funds of Australia (ASFA) is illustrative. And the best thing is that it’s updated every quarter to reflect the changes in inflation.
ASFA divides its standard into two categories:
- A comfortable lifestyle that allows an older and healthy retiree to engage in a wide range of recreational and leisure activities. They can also buy both necessities and otherwise while also enjoying occasional travels.
- A modest lifestyle that allows retirees to engage in necessary activities and purchase necessities.
ASFA then further divides these two categories above into two groups – couples and singles. And according to ASFA, for retirees around 65 years, their yearly budgetary standard is as follows:
|Modest lifestyle||$28, 220||$40, 719|
|Comfortable lifestyle||$44, 183||$62, 435|
On the other hand, for retirees around 85 years, their yearly budgetary standard is as follows:
|Modest lifestyle||$26, 769||$38, 285|
|Comfortable lifestyle||$42, 158||$58, 491|
Also, these estimates exist based on certain assumptions. They include the fact that the retirees already own their house and don’t need to make any mortgage payment. And they are reasonably healthy.
Upon retirement, your expenses will still cut across gas and electricity food, internet bills and phone bills, transport, leisure, and health services, among others. As such, you need to make plans through savings, investment, and superannuation for post-retirement.
In case you need help, you can contact us at Bearded Dragon Finance.