The average age for retirement in Australia is around 64 years old. At this point you can access your superannuation, and you're only a few years away from receiving the Age Pension (if you're eligible).
But you don't want to wait until you retire to work out if you have enough money to fund the lifestyle you want. Your retirement planning needs to start a lot earlier than that.
By age 54, or around 10 years out from your intended retirement age, you need to be aware of exactly how much you have in your superannuation, how much you need to retire, and how to bridge that gap (if there is one).
Here's a rundown of everything you need to know.
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How much will retirement cost me?
The benchmark for a comfortable retirement recently increased off the back of higher inflation.
According to Association of Superannuation Funds of Australia (ASFA) data, a comfortable retirement lifestyle will now cost individuals around $54,840 a year, or for couples, this can be closer to $77,375 a year.
The cost of a modest retirement is a lot less. In order to live a modest retirement lifestyle at age 60, individual Australians can expect to need $35,503 per year, or for a couple this would be closer to $51,299 per year.
What's the difference between a comfortable and a modest retirement?
ASFA defines a comfortable retirement as one which allows Australians to maintain a good standard of living. It assumes you'll keep top-level private health insurance, will own a reasonable car brand, undertake regular leisure activities, have funds for home repairs and renovations, go for an occasional meal out, and maybe even an annual domestic trip (or occasional overseas one).
A modest retirement is defined as one which allows Australians to cover expenses slightly above the full Age Pension payment. This assumes you'll hold basic health insurance, a cheap car model (or none at all), a limited home repair budget, minimal utility expenses, limiting dining out, and infrequent travel.
It goes without saying that nearly all Australians aspire for a comfortable retirement lifestyle.
So, how much should I have in my superannuation today?
To fund a comfortable retirement, ASFA has calculated that single Australians will need a superannuation balance of around $630,000, or couples would need $730,000.
In order to reach that goal, at around 10 years out from retirement you should have close to $439,000 in your superannuation.
Help! I'm 10 years out and my superannuation isn't ready. What can I do right now to boost my balance?
Don't panic.
The good news is that, with 10 years left to go, at age 54 you still have time to build up your superannuation balance to be able to live comfortably when you stop work.
First, you want to check that your superannuation fund is performing well, and that its risk profile matches your own.
Then you can look to make additional concessional or non-concessional contributions, whether this is salary sacrificing or after-tax payments (within your annual limits).
If you don't have the funds to add more money yourself, you can also look into government initiatives. There's the downsizer contributions rule, the bring-forward rule, the government co-contribution rule, and many others. These can help boost your balance just a little bit further.
