At the age of 62, your superannuation should be a priority.
After all, by this point, you can retire whenever you're ready.
At age 62, Australians have passed their preservation age (60 years old) so they can access their super whenever they like.
They're also just three years from the average retirement age (65 years old), and five years from receiving the Age Pension if eligible (67 years old).
The most important thing to work out before you retire is whether your superannuation balance is enough to fund the retirement lifestyle you want to live.
So, you want to retire comfortably at age 62? First, let's break down what that might look like, and how much money you'll need.
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What does a comfortable retirement look like?
In Australia, retirement is generally split into two categories: a modest retirement and a comfortable one.
A modest retirement, according to the Association of Superannuation Funds of Australia (ASFA), is defined as being able to cover expenses slightly above what the full Centrelink Age Pension would provide from age 67.
Then, a comfortable retirement is defined as one that enables retirees to maintain a good standard of living well beyond the Age Pension. It budgets for expenses beyond a modest retirement, including top-tier private health insurance and regular leisure activities. It allocates funds for home repairs or renovations, and perhaps even an annual holiday. This is what the majority of Australians aim for.
How much does a comfortable retirement cost?
ASFA estimates that a comfortable retirement will cost roughly $55,923 per year for single Australians. For couples, the annual cost will be closer to $78,566.
Note, however, that these figures assume you'll receive a part of the Age Pension and that you own your home outright. It's also expected that you have an emergency fund set aside.
Ok, so how much do I need in my superannuation by age 62 to be able to afford that?
In order to fund a modest comfortable retirement, ASFA calculates that single Australians will need around $630,000. Meanwhile, couples will need around $730,000 combined.
But there is a catch.
These figures are calculated on the assumption that you'll access your superannuation from age 67.
They also assume you'll need to fund around 10 years of a comfortable retirement.
So, if you're planning to retire earlier, at age 62, you'll need to factor in those five additional years.
I've done a quick calculation using ASFA's figures to work out the sum you actually need to retire at age 62.
Singles will need to have closer to $840,000 in their superannuation. Meanwhile, couples will need a combined balance of around $1.2 million at age 62. This assumes you'll need to fund around 15 years of retirement.
But remember, if you don't own your home outright, you'll also need to consider how you'll pay your mortgage or rent on top of your other bills and budget accordingly.
