How much will you need to retire? It’s the 1 million dollar question

Posted by Pacesetter Financial Services

A report1 released earlier this year revealed that a ‘comfortable’ lifestyle in retirement will cost a healthy retired couple, who own their own home, $58,922 per year. Given a life expectancy of nearly age 83, that will amount to having over 1 million dollars in retirement funding. The alternative is a ‘modest’ lifestyle, requiring $34,064 per couple for year (which is slightly more than the Aged Pension2). Either way, creating a capital base that will deliver funds for your retirement takes planning and if you haven’t started thinking about it yet, it’s time you do.

This table shows ‘modest’ and ‘comfortable’ lifestyle budgets as of March 2016 for retired singles and couples who own their own homes. A modest retirement lifestyle is considered better than the Age Pension but includes only fairly basic activities. As detailed here, a modest lifestyle equates to around $23,651 per year for an individual and $34,060 for a couple.  

*The table assumes home ownership.

A comfortable retirement lifestyle enables healthy retirees to be involved in a broader range of leisure and recreational activities with a good standard of living associated with the ability to purchase household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel3. While a comfortable lifestyle is indicated at $42,893 for a single and $58,922 for a couple per year, how does this compare to your current lifestyle? There is every chance that the lifestyle you are accustomed to as an income earner is considerably more expensive than what is considered a comfortable lifestyle in retirement. This begs the question – will you want to adjust to a lesser lifestyle, and if not, will you have enough to retire?

The average life expectancy for Australians is 82.10 years (2012)4. Based on the requirement of $58,922 per couple per year to fund a comfortable retirement lifestyle for the 18 years from age 65 to 83, you will need $1,060,596 in retirement funds. This really is the 1 million dollar question.

If you’re between 30 and 40, your main retirement consideration may be whether you are making adequate super contributions to afford the lifestyle you aspire to in the table. We can help by showing you projections based on current and revised contributions.  We can also guide your decision-making in determining the most suitable style of super fund for you by outlining the types of funds that are available and offering advice on what to bear in mind as you decide.

If you’re between 40 and 50, your main retirement consideration may be finalising debts and whether you are now in a position to implement additional savings or investment strategies to help you prepare for retirement. Whether you are an experienced investor or preparing a new portfolio, we can help you identify your investor profile and show you a range of tailored options for an investing solution that matches your personal investing style.

For pre-retirees, even though the kids are off your hands, the demands on your finances may be far from over. How will you fund the retirement lifestyle you hope to enjoy ? And how would you like your assets to be distributed upon your passing? We can offer guidance and leadership as you navigate these financial complexities. Our scenarios can show you likely outcomes of appropriate asset allocations or unlocking capital to meet your expenses.

Retirement income planning
At Pacesetter our retirement income planning service helps you to work out whether your current or projected asset base is on track to support the level of spending for the ‘modest’ or ‘comfortable’ lifestyle you aspire to when you retire. If it’s not, we can review your retirement planning strategies with the aim of increasing your income during retirement. Our Retirement Case Study describes just some of the ways we can help.

If you would like to talk further about your financial preparedness for retirement (or any other aspect of your financial planning), please contact us today on (07) 3808 2808.

1 Association of Superannuation Funds of Australia (ASFA) Retirement Standard, March quarter 2016
2 as at 11.8.16


Pacesetter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

This information (including taxation) is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Pacesetter Financial Services strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.