According to the Australian Bureau of Statistics, the average age of retirement in Australia is on the up. But how much superannuation is enough to fund your retirement?
Of the 4.2 million retirees in Australia in 2022-23, the average age at retirement was 56.9 years.
However, research shows those aged 45+ intend to retire at 65 years, on average.
If you aim for somewhere in the middle — around the age of 60 — the amount of superannuation you require will largely depend on your lifestyle.
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Retiring at 60
According to AFSA, singles who plan to spend modestly in retirement need $32,930 per year.
The definition of a "modest" lifestyle according to ASFA is:
A modest retirement lifestyle is considered better than the Age Pension, but still only allows for the basics.
Meanwhile, if you plan to live a "comfortable" lifestyle in retirement, AFSA estimates you need $51,814 per year as a single person.
AFSA describes comfortable retirement as:
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
For couples, AFSA estimates needing $47,475 per year for a modest lifestyle and $73,031 for a comfortable retirement.
Both budgets assume that the retirees own their own home outright and are relatively healthy.
How much superannuation would you need?
According to AFSA, in order to fund these lifestyles as a retiree at 60, you will need the following (inclusive of pension):
Comfortable retirement:
- Singles $595,000
- Couples $690,000
Modest retirement:
- Singles $100,000
- Couples $100,000
The modest retirement estimate takes into consideration the base rate of the Age Pension.
Another estimation from Equip Super suggests a single person could retire at 60 with a super balance of around $515,000.
A couple retiring at age 60 would need a combined super balance of around $660,000.
What factors should you consider?
Data from the ABS shows Australians can expect to live until 81-85 years old.
This means that if you plan to retire at 60, your retirement savings may need to last 20 – 25+ years.
When considering retirement, the Australian Retirement Trust suggests some key factors to consider are:
- Your health
- Your employment situation
- The demands of your job
- Your family's or partner's situation
- Your super and other savings
- Your property or things you own (assets)
- Any debts you have (e.g. credit cards or a mortgage)
- Any large expenses like home renovations, overseas travel, or medical costs
- Whether you could get the Age Pension
