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If you’ve met with one of our friendly Super Advisers or read our online resources, you’ve probably heard us say that, when it comes to how much money you need in retirement, there’s no one set figure that works for everyone.

However, there are a couple of figures that we can use as a guide. One of these is the ASFA Retirement Standard, put together by the Association of Superfunds of Australia.

This standard shows the lump sum amount needed by the average Australian to fund a comfortable or modest retirement – it assumes that the retiree owns their own home, and will draw down all their capital and receive a part Age Pension.

The lump sum figures have been the same for a number of years but increased in the March 2023 quarter, with ASFA explaining that the high rate of inflation over the last year has substantially raised the amount of spending required to achieve either ASFA’s Modest or Comfortable retirement figures.

“While the rate of inflation may ease going forward, the costs of either a modest or comfortable retirement have been permanently ratcheted up by recent developments in living costs,” ASFA stated.

What balance do you need?

According to ASFA, the lump sum amounts now needed at 67 for a comfortable retirement are:

  • Couple: $690,000
  • Single: $595,000

This is an increase of $50,000 for both couples and singles.

The lump sum amounts now needed at 67 for a modest retirement are:

  • Couple: $100,000
  • Single: $100,000

This is an increase of $30,000 for both couples and singles.

What’s the difference between a comfortable retirement and a modest retirement?

The biggest difference between a comfortable retirement and a modest retirement is that a modest retirement will have a bigger reliance on the Age Pension.

This could look like the difference between being able to run air conditioning in the summer vs having to watch utility costs; or the difference between domestic and occasional overseas holidays, and just being able to take one domestic holiday or a few short breaks over the course of your retirement.

However, it’s important to note that the Retirement Standard won’t cater for everyone. For example, it assumes that for both a modest and comfortable lifestyle, the retiree, or retirees, are relatively healthy; own their own home outright; will draw down all their capital; and eventually receive a part or full Age Pension.

How can the lump sum last through retirement?

Even though the Standard amounts have increased, it can be difficult to believe that these figures can last through decades of retirement. With that in mind, it’s important to understand how this amount will be used in retirement.

The Standard assumes that your super will continue to be invested through retirement and likely draw down via an income stream, rather than withdrawn from the super environment as a lump sum and moved into a bank account, for example. Depending on your assets, you may also be able to tap into the Age Pension over these years.

You can learn how to set up your retirement budget here.


Simulate your income in retirement

You can use Qantas Super’s Retirement Income Simulator to estimate your projected super balance and how long it may last in retirement.

The simulator is designed to estimate your total retirement income, including benefits you may receive from the Age Pension and non-super investments. You can also choose to factor in super details for your spouse or partner (if applicable) and see the impact of a career break or move to part-time work on your projected super balance. This enables you to more clearly assess your estimated financial position in retirement and what you may need to do to reach your desired retirement balance.

The way you spend is likely to change

Along with the fact that the amount will stay invested, it’s also important to remember that the way people spend their money as they get older typically changes.

ASFA explains that as people age, their spending requirements change as they are often unable to engage in the same types of activities and require a higher level of care and support. This has an impact on their budget and expenditure requirements.

For example, older retirees tend to spend more on assistance in the home, including for cleaning services and meals, as well as contributions towards home and community care services. They also tend to have increased out-of-pocket expenses for major medical procedures and ongoing chemist and other medical expenses. On the other hand, they also tend to spend less on holidays and other leisure activities outside the home, most likely reflecting their reduced capacity for activity.

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