Is it a lot or a little socialising? Hobbies,old and new? Travel and if so,where to? What’s your appetite for eating out?
Think about what you want and how you spend,so you can have a wholesome retirement,not just a “modest” one.Louise Kennerley
How much this would all cost you in any given year is key to determining the lump sum you should be shooting for in retirement. It’s an important and individual thing,with no one size fits all answer.
Having said that,the Association of Superannuation Funds of Australia gives us a guide. It has defined the features of a modest and a comfortable retirement,in an often hotly contested template.
Last week it revealed the latest numbers are up 3.5 per cent over the past three months so,if there is a thin silver lining,a little less than inflation at 4.1 per cent.
Home and contents insurance constitutes the highest extra hit to retirees’ hip pockets currently,16.2 per cent up for the year.
Electricity has been contained at just 6.9 per cent,down from the 14.5 per cent increase in bills in the 12 months to September,showing that energy bill relief fund rebates have been somewhat effective.
Then food inflation is 4.5 per cent,again down from the peak of 9.2 per cent in December 2022,but not insignificant.
The overall annual cost of being comfy in retirement is now said to be $72,148 for couples and $51,278 for singles. Still,the lump sum required to fund this from age 67 is put at $690,000 for a couple and $595,000 for a single (ASFA raised figures by $50,000 last year to contend with inflation).
Just note that the lump sum amounts are lower than the $1 million that is often thrown around as necessary because they assume you own your own home by retirement,and that you draw down your entire balance,getting progressively more age pension,over the course of your life.
In other words,you go SKI-ing – Spend the Kids’ Inheritance. Which,having worked a lifetime,I believe you richly deserve.
So just what does that “comfy” life look like versus a “modest” one? Essentially,a modest one is not very appealing.
Features that are factored into a comfortable retirement are:
This brings us to the two big lifestyle factors:only occasional restaurant meals and food deliveries,and infrequent take away coffees.
And one annual domestic holiday with an overseas trip every seven years. By contrast,the modest designation includes only an annual domestic trip or a few short breaks.
What do you think? Would an annual $71,148 afford a couple all this? And would a single secure it,bearing in mind they have to foot all household bills themselves,with $51,278?
Think about what you want and how you spend. Are these your vital benchmarks,and therefore target super balances,too?
Nicole Pedersen-McKinnon is the author of. Follow Nicole on, or.
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