Will you have enough money to retire?

Old man

After decades of work most people look forward to their retirement as a time to sit back and enjoy all their hard work.

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After decades of work most people look forward to their retirement as a time to sit back and enjoy all their hard work. It should be a time to kick back and reward yourself by doing whatever it is you love to do – travel the world, buy a brand spanking new boat, enjoying the company of family and friends, maybe even work on that golf swing!

But how much money do you need to do all those things you want and ensure you’re never forced to switch off the aircon, reuse teabags and eat baked beans on toast every night of the week?

It’s a figure that’s going to be different for everyone, due to their varying retirement goals. Some of the key things to consider (which will impact on the final figure) include:

  1. What age you would like to retire? Most people retire between 60 and 65 – but maybe you’d like to say “adios” to the daily grind in your 50’s?
  2. How much do you need each year in retirement? What kind of retirement do you want? International travel six months a year is going to cost much more than if you just need some beer money while you go fishing or spend time with the grandkids.
  3. What assets do you currently have that you’ll use towards retirement funding? Do you plan on selling an investment property, downsizing, will you receive an inheritance, do you currently have a super, shares or managed funds?
  4. How long are you going to live for? Crystal ball anyone? Most people retiring at 60 can, on average, expect to live for 22 – 26 years in retirement, but you may well receive your telegram from the Queen at 100, so you may want to build in a buffer!
  5. What type of assets you invest in to build your retirement nest egg (and also after you retire) – different asset classes (cash, fixed interest, shares and property) typically have different returns. It’s stating the obvious that if you are in lower returning investments you’ll need a higher balance when you retire.

The Association of Superannuation Funds of Australia who survey current retirees suggest a couple wanting a ‘comfortable’ retirement will need $56,236 each year in retirement. You may need more, you may need less.

The above factors can be used to give you a good indication as to how much you’ll need, as a minimum, to live your dream retirement. There are other factors, some which you can’t control, that will have an impact which include: age pension entitlements, aged care and medical costs and inflation rates.

To get an idea of how you are currently tracking to meeting your retirement goal check out the governments’ Moneysmart website –  or fill out the contact form below for more detailed information.

Next month we’ll look at the options you have to build your retirement funds.