It’s pretty clear that when it comes to retirement, most of us have no idea how much we might need to save up. Nor do we have any idea how much we’re likely to have in in the future. Or even what our super balance might be right now!
Luckily, the Association of Super Funds of Australia (ASFA) has done some calculations for us. Each quarter, ASFA works out exactly how much money Australians might need in super to support a particular lifestyle in retirement.
*All figures in today’s dollars (2018), using 2.75% average weekly earnings as a deflator and an assumed investment earning rate of 6%.
With a ‘comfortable lifestyle’, you’ll be more likely to afford air conditioning, fast internet connections, restaurant dining and occasional overseas holidays. On a ‘modest lifestyle’, you might need to watch your utility costs, and only be able to afford modest internet data, occasional cheap restaurants and one holiday in Australia.
ASFA calculates that a modest lifestyle would require a total super balance of $70,000 (coupled with the Age Pension).
Just remember that ASFA’s calculations assume you will have some access to the Age Pension (in whole or in part). And it doesn’t take into account rent or mortgage repayments if you don’t own your house by the time you retire. It is important to factor that into your savings plans as well.
You can read all about ASFA’s calculations and their summary of a comfortable or modest lifestyle here. For now at least, their estimations can help give you a savings figure to aim for.