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.
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