Size definitely matters when it comes to superannuation if you want to be financially secure when you retire. Hence you have to know how much money you’ll need when you stop working and to ensure that your employer as well as your own contributions are enough to compensate that goal.
The amount of extra money you contribute to your super is determined by how much you will need to live off upon your retirement. The following factors are also to be considered in estimating the amount of super you would need:
- how long you live
- what type of lifestyle you want
- future medical costs
The table below will give you a rough idea of how much money you need to be able to retire modestly or comfortably. This applies for people retiring at the age of 65 and who will live to an average life expectancy of about 85.
Another way to estimate how much money you will need in retirement is to assume you need 67% (two-thirds) of your income before you retire in order to maintain the same standard of living in retirement.
Association of Superannuation Funds of Australia (ASFA) estimates the lump sum needed to support a comfortable lifestyle for a couple is $610,000 (or $430,000 for a single person) assuming a partial Age Pension. ASFA also observes that the lump sum required for a modest lifestyle for a couple is $50,000 ($35,000 for a single person) since such lifestyle is mostly met by the Age Pension.
You can also work out how big should your nest egg be by using the ASIC’s Retirement Planner and know how much money you’ll have to put away now for your retirement.
Uncertain if your superannuation contributions are enough for your retirement?
Talk to us about it and we will be happy to assist you!