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Your retirement goals
At some point in our lives we’ll all retire. And, we hope that we can retire with enough money to enjoy all the things that we couldn’t actively pursue during our working years. For some people it may mean travelling (when we can!), home renovations or simply spending more time with family and friends. Ultimately, you’ll want enough money to live comfortably and safe in the knowledge you won’t run out of money and have to go back to work, unless of course you want to.
When you retire, your superannuation, assets and other investments are your sources of income. You no longer have a regular salary coming in and you rely on these savings to fund your living expenses.
The ASFA Retirement Standard provides a picture of how a modest lifestyle compares to a comfortable lifestyle and how much you’re likely to spend to maintain each of these two standards of living.
A comfortable lifestyle includes extra items that are considered to be ‘comforts’, such as updating the kitchen or bathroom, having private health insurance at the top rate and enjoying an occasional holiday.
The ASFA figures in table 1 estimate that, for a couple to maintain a modest lifestyle in retirement, they’ll likely spend around $791.73 per week compared to a couple who wish to live a comfortable lifestyle who are likely to spend not quite double that, at around $1,218.30 per week.
However, both of these weekly budgets assume that you own your home so it doesn’t include the cost of rent or mortgage repayments.
If you’re relying on the age pension and, like most of us, are planning on a comfortable lifestyle in retirement, you’ll have a gap of $385.53 per week if you’re single ($861.88 - $476.35) or a gap of $500.20 per week ($1,218.30 - $718.10) if you’re a couple. Although the age pension is there as a social security safety net, it’s not an ideal level of income to live comfortably.
Super is a good way to save for retirement, especially if you start making extra concessional contributions.