Advertising feature

How much money do you need to retire comfortably?

This is a common question that many people ask, especially once they hit their 50s.

There are lots of opinions on the dollars required for a comfortable retirement.

But first, what is a comfortable retirement, and what does that mean in cost per year? The Association of Superannuation Funds Australia (AFSA) says that a comfortable retirement means being able to:

  • Afford private health
  • Drive a reasonable car
  • Dine out regularly
  • Afford good clothes and a range of electronics
  • Travel within Australia and occasionally overseas

In other words, a comfortable retiree can enjoy a broad range of leisure and recreational activities and still have a good standard of living. So, what is the cost?

According to ASFA, a 65 year old couple needs $59,971 per year and a 65 year old single person needs $43,665 (as at March 2017).

These figures assume that the retiree(s) own their own home. Peter Farrar and Cindell Baker deal with the issues of retirees every day.

This advertising feature is sponsored by the following business. Click the link to learn more.

They agree that this is a good starting point, but the amount that people live on varies a great deal. Peter Farrar says we have some people who can live on close to half of the above figures, so they manage on a modest income of $500 to $600 per week, and they are surprisingly happy.

At the other extreme, there are some who easily spend $80,000 to $100,000 each year.

Peter Farrar says people can retire with a relatively small superannuation balance, say $250,000, and still be comfortable.

But they would need to be old enough to access an age pension, or other income support.

Assuming they qualify for a full age pension (or close), then a couple receive the following:

  • Age pension $34,814 per annum (combined)
  • Top up required $25,000 per annum
  • Total income $59,814 per annum

The top up of $25,000 could be generated from, for example, an account based pension, a simple investment account or, less sustainable, from a bank drawdown.

Need financial planning help?

Call Cape Financial Planning on 9751 2022.