Are you planning to retire at age 64? If so, do you know if you have enough superannuation to fund the comfortable lifestyle that you want?
After all, at this age, retirement is very possible. At age 64, you've already passed the preservation age of 60. You're also only one year from the average retirement age, and three years from potentially receiving the Age Pension payment.
Let's break down what a comfortable retirement looks like. Then dive into what it might cost you to retire comfortably at age 64. Then you can figure out if your super is on track.
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Here's what a comfortable retirement looks like
In Australia, retirement is generally split into two categories: a modest retirement and a comfortable one.
According to the Association of Superannuation Funds of Australia (ASFA), 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 including top-tier private health insurance, regular leisure activities and the occasional meal. It allocates funds for home repairs or renovations, and perhaps even an annual holiday.
Meanwhile, a modest retirement is defined as being able to cover expenses just slightly above the full Centrelink Age Pension provisions from age 67.
How much will it cost me?
In order to retire comfortably at age 67, ASFA estimates that you'll need to allocate around $55,923 per year if you're a single Australian living alone. A couple living together will need $78,566 per year.
These figures also assume you'll receive a part Age Pension. They also assume you own your home in full, and that you'll be able to create and stick to your financial goal.
In order to fund this type of comfortable retirement, ASFA calculates that single Australians will need around $630,000 in their superannuation. Meanwhile, couples will need around $730,000.
Obviously, the catch is, if you're planning to retire three years earlier at age 64, these figures don't quite work. You'll need to allocate extra savings to fund those three extra years.
Ok, so how much do I need in my superannuation at age 64 to retire comfortably?
I've done the math for you, using ASFA's figures, to work out what you should aim to have in your superannuation by age 64.
Singles should aim to have closer to $727,000 in their superannuation and couples closer to $1.02 million at age 64.
Remember also, these figures assume you won't need to pay mortgage or rent bills in retirement. So if you don't own your home outright, you'll also need to factor in these costs too.
