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Can you retire comfortably with $300,000?

Retirement  |  8/08/2017  |   5 min read

One of the biggest misconceptions surrounding retirement is the amount of money you’ll need. Some people say you’ll need a million dollars, but the reality is most Australians retire with far less. According to ASFA (Association of Super Funds of Australia), the average superannuation balance at retirement was $292,000 for men and $138,000 for women in 2014.

So what does that mean for Australians and their retirement lifestyle? According to Tom Garcia, former CEO of AIST (Australian Institute of Superannuation Trustees), “It’s time to get real about super and ensure all Australians have a far better understanding of the sort of income they can expect in retirement.”

If you’re looking for a comfortable retirement $300,000 in super may be enough. Here’s why.

Super supplements the Age Pension

As Tom Garcia explains in the Busting the $1 Million Retirement Myth report,  “Most people approaching retirement will draw an income that is a combination of both super and the Age Pension. The key point for people to appreciate is that even relatively modest super balances can make a meaningful contribution to an adequate retirement income when combined with the Age Pension.”

A single retiree on the full Age Pension receives $23,096 per year, which works out to about $445 a week. That’s well short of ASFA's comfortable retirement income of $43,665 per annum ($840 per week). But those numbers don’t tell the whole story.

A recent study by AIST showed that a super balance of just $150,000 “delivers an additional $163 week on top of the Age Pension – a 38 per cent increase.” That brings the income up to approximately $608 a week.

Now assume you double that to $300,000 in superannuation savings, which is much closer to the average Australian balance than $1 million.  Based on the same AIST calculations that should deliver an extra $326 in weekly income. When combined with the age pension thart takes your weekly income to $771. That’s $40,000 per annum, and is much closer to the ASFA standard for a comfortable retirement.

As Tom Garcia summarises, “Rather than despair, workers with $100,000, or even $50,000 in their super accounts should take heart. The super savings they’ve accumulated give them options they might not realise.”

How do your savings stack up? 

As long as you’re still working you can continue to boost your super, and a financial planner can help you identify simple actions to improve your  long term balance without any additional payments. If you’re an equip member your financial planning consultation and plan can be charged directly to your super account, meaning no out of pocket expenses. 

 

Speak to an Equip financial planner about your retirement goals, and discover ways to increase your future balance. Book an appointment online or call 1800 065 753.

 

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383. MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

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