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How much do I need to retire?

Posted by Northadvisory on November 8, 2019

How much do I need to retireIt’s never too early to start thinking about your retirement. Even if you are only in your 20s and just starting your career, it’s worthwhile taking the time to seek some retirement financial advice and make plans in order to achieve your goals.

The question of how much you will need depends on many variables, and the answer will be different for every person. We spoke to Cayle Petritsch, Director and Wealth Specialist, about how North Advisory can help you determine your retirement income needs and set you on the right path.

Questions you need to askLevel of income

When you start to think about retirement, you need to ask yourself some questions in order to determine the level of income you will need to support your lifestyle. Cayle explains,

“When it comes to superannuation, a lot of the time people don’t really think about it until they need to… when they are getting to the later stage of their career, or when they need to start receiving a pension, or at least preparing to start withdrawing.

At North Advisory, we encourage our clients to start thinking about super early on because we know that the longer you are actively growing your funds, the more you will have to retire comfortably.

Specific financial figureAs for a specific financial figure… there are so many different variables.

  • You need to know how many years until you retire. Are you aiming for the standard age or do you want to retire early?
  • Will you have a retirement job? For instance, some people retire from full-time work but they might take on a casual job to keep themselves busy.
  • You also have to consider the type of lifestyle you want. Do you want to go on holiday regularly? Do you like to eat out multiple times a week?
  • Do you own your own home? What other assets or income do you have?
  • Plus, will you be eligible for the age pension?

Asking all these questions can help you determine the income you will need in retirement.”

Modest or comfortableModest or comfortable

Of course, everyone wants their retirement to be the best it can be… but you might need to adjust your expectations based on what is achievable.

If you have determined that you need an annual income of $75,000 to support your desired lifestyle, but your current projected superannuation will only support $50,000, then you might need to review some of the items on your ‘want’ list.

The Association of Superannuation Funds Australia (ASFA) has published some basic figures as a guideline around annual income needs:

Modest Comfortable
Couple $40,194 per year $61,786 per year
Single $27,913 per year $43,787 per year

ASIC also has some online resources that can be useful in helping you determine how much is enough for your retirement.

Cayle continues,

“As part of this discussion we need to look at what is a comfortable retirement.

It is being able to go on holidays a couple of times a year… enjoying a good standard of living. You can make purchases for household items without strict budgeting. You can afford private health insurance. You might have a nice car or high-tech electronics in your home.

Comfortable means you could buy your grandkids a gift without being concerned about your next utility bill.

However, a modest lifestyle is more budget conscious. It would still be higher than the age pension on its own, but you would need to be mindful of your expenses.

While these figures are published, it really depends on what you want from your retirement. The answer is different for every single person… again, we recommend that you ask yourself questions about what you want your lifestyle to be like.”

How we can helpRetirement financial advice

Seeking retirement financial advice is the first step. We can help you assess your current situation and establish a plan that will suit you. Cayle concludes,

“We talk to you about what you want in retirement. We look at what you currently have in your super and other assets and we calculate if your goals are achievable from where you are currently positioned.

Sometimes this can be confronting because people don’t realise the disparity between what they have and what they want to spend.

We firmly believe the earlier you start considering your future the better… but in saying that, we can help regardless of your stage in life. We understand that when you are in your 20s, the last thing you want to think about is retirement, but even if you just become more aware then that’s a start.

We assess your super fund… are the assets right for you? Are they suited to what you want to achieve in the future and are they going to support you in retirement? We can determine whether any modifications should be made in order to achieve your goals.

For many of our older clients, we look at ways to preserve their capital because most people want to be able to leave something to their kids. We find ways to preserve that while also generating the returns they need to fund their lifestyle.

It doesn’t matter where you are in life… 20, 40, 60 or in your 70s… we can provide a valuable service.”

Contact us today to find out how we can help you plan for your retirement.