Super – How am I tracking?

The whole point of superannuation is to help Australian workers build the savings we need to look after ourselves in retirement. But one of the most commonly asked questions new clients ask our financial planners is “How am I tracking?” Well the answer really depends on your retirement goals.

According to the latest “retirees costs of living” assessment conducted by the Association of Superannuation Funds of Australia, a couple would require a yearly retirement income of $69,691 for a comfortable retirement. For singles, a comfortable retirement requires an annual income of $49,462.

The report defines “comfortable” as “enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.”

Couples aspiring to a comfortable retirement will require a combined superannuation balance of $690,000. The single wanting a comfortable retirement will require a superannuation balance of $595,000. In both cases, this assumes home ownership, and receipt of a partial Age Pension. These numbers however don’t tell the full story if you’re not yet at retirement, or are aiming to retire on a different level of income.

How much is enough for you?

A more practical answer is to look at how much you spend at the moment. Many clients tell us they’d rather not think about it, but in practice, it’s a simple and realistic way to approach the question of “will I be ok financially?”

Start by looking at what after-tax income you currently have, and then adjust this figure for expenses that will change in retirement (eg mortgage repayments finish, cost of children perhaps, and so on). If some of this income is already provided (say from an investment property) then you can calculate the gap that will need to come from superannuation or other savings.

Calculate how you’re tracking
Once you have worked out your income need in retirement, look at how you’re shaping up using one of the many online retirement calculators or apps that are available, such as the government’s Moneysmart Retirement planner. Most major super fund providers have such a tool, in many cases linked to your actual account login for ease of updating.

Your approach to debt and property can be a big factor – if you’re currently focused on the mortgage and going slow on super, super calculators might make you think you’re really behind. Similarly, if you’re planning to downsize at retirement, the extra cash from this should be factored into the equation. A tailored plan from an experienced financial planner can give you the true picture, along with strategies to achieve the best possible retirement outcome.

It’s never too early to start planning for a comfortable life after work – and it’s never too late to make some improvements either. For any advice relating to your super and having enough, contact AGS Financial Group today.

MoneySmart Retirement Planner example 2023

Published : 26 Jun 2023