At age 59, you're just one year from reaching preservation age, which means you can start drawing down on your superannuation if you've stopped working.
It's one of the most important crossroads in life, and one where the decisions you'll make over the next few years will determine the quality of life you have in retirement.
But do you know what it costs to retire comfortably versus on a budget? And how much should you have in your super at age 59 to support yourself when the time comes?
Let's take a look.
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What does it cost to retire?
According to the Association of Superannuation Funds of Australia (ASFA) figures, there are two main options for your retirement. A comfortable retirement lifestyle, and a modest one.
A modest retirement means you'd need to live on a tight budget after you quit working. It assumes you can cover very basic needs and requirements, including basic food costs, enough to cover essential bills, low-tier health insurance, and minimal leisure activities or meals out. It assumes you own your home outright and that you'll receive at least a partial Age Pension payment.
ASFA estimates this will cost single retirees around $36,434 per year, and closer to $52,473 for a couple combined.
Then there is the comfortable retirement option. This is one that allows retirees to have a good standard of living well above the bare minimum. It allows Australians enough money to finance top-tier private health insurance, a reasonable grocery budget, home repairs, and regular leisure activities or meals out. It also includes a budget for an occasional holiday.
A comfortable retirement is estimated to cost single retirees around $55,923 per year or $78,566 for couples. Again, it assumes you'll receive a part Age Pension and that you own your home in full.
How much do I need in my superannuation to finance a comfortable retirement?
ASFA has calculated that single Australians will need around $630,000 in their superannuation, and couples will need around $730,000.
The catch is these figures assume that you'll be retiring from age 67 and that you'll need to fund around 10 to 15 years of retirement living.
OK, so how much should I have in my superannuation at age 59 to reach this goal?
I've crunched the numbers using ASFA's online super detective tool and, assuming you have an income of around $100,000 per year, Australians should aim to have a superannuation balance of around $434,500 by age 59.
How does this compare to your own superannuation balance?
What if I want to retire a couple of years earlier at age 65? How much would I need to have today to be considered on track?
That's very achievable, but you'd need to have enough in your superannuation at age 65 to fund those two extra years.
Your annual costs will be around the same: $55,923 per year for single Australians and $78,566 per year combined for a couple living together.
But, as I mentioned above, you'll need to fund an additional two years above what ASFA accounts for.
That means, at age 65, singles will need to have around $742,000 in their superannuation, and couples will need a combined balance closer to $888,000 at the same age.
To be considered on track for this amount at age 59, you'd need to have around $481,000 in your superannuation.
Is it possible to retire at age 60 and still live comfortably in retirement?
Yes. Again, this is very achievable if you have the funds to be able to support yourself for those additional seven years until age 67.
At age 60, singles will need to have closer to $1 million in their superannuation. Meanwhile, couples will need a combined balance of around $1.3 million at the same age.
That means that at age 59, your superannuation balance should be very close to these levels. If not, you'd have just one year to make up the difference.
