When you think about what your life is like when work is done, what do you see? How you envisage your lifestyle will determine how much super you’ll need to make those goals a reality.
The Association of Superannuation Funds of Australia (ASFA) study tracks how much you need to maintain either a ‘modest’ or ‘comfortable’ retirement. We’ve summarised these differences compared with relying solely on the age pension in the table below:
|Comfortable Retirement||Modest Retirement||Age Pension Only|
|One annual holiday in Australia||One or two short breaks in Australia near where you live each year||Even shorter breaks or day trips in your own city|
|Regularly eat out at restaurants. Good range and quality of food||Infrequently eat out at restaurants that have cheap food. Cheaper and less food than a ‘comfortable’ lifestyle standard||Only club special meals or inexpensive takeaway|
|Owning a reasonable car||Owning an older, less reliable car||No car or, if you have a car, it will be a struggle to afford repairs|
|Afford bottled wine||Afford cask wine||Home brew beer or no alcohol at all|
|Good clothes||Reasonable clothes||Basic clothes|
|Take part in a range of regular leisure activities||Take part in one paid leisure activity infrequently. Some trips to the cinema||Only taking part in no cost or very low cost leisure activities. Rare trips to the cinema|
|A range of electronic equipment||Not much scope to run air conditioner||Less heating in winter|
|Replace kitchen and bathroom over 20 years||No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom||No budget for home problems like a leaky roof|
|Private health insurance||Private health insurance||No private health insurance|
For most people, a ‘comfortable’ retirement lifestyle is preferable to a ‘modest’ one. A comfortable lifestyle enables you to engage in a wider variety of leisure activities and a better standard of living. But is this a reality?
Assuming you own your home outright and are reasonably healthy, the ASFA study estimates the following yearly costs (how much you’ll need to budget for each year) for these lifestyles in retirement:
ASFA Retirement Standard – Budgets for various households and living standards for those aged around 65 (June quarter 2018 national)
|Modest lifestyle||Comfortable lifestyle|
|$28,254 p.a.||$40,829 p.a.||$44,412 p.a.||$62,828 p.a.|
ASFA Retirement Standard – Budgets for various households and living standards for those aged around 65 (March quarter 2021 national)
We have a number of tools available so you can see how your super is tracking. For most members, the annual Benefit Statement includes a projection of your Mercy Super account balance at 67 and the annual income it’s likely to provide.
To help you understand if you’re on track, this table provides an estimate of the super needed for a single person or couple retiring at 67, providing the income needed for a ‘comfortable’ lifestyle over 25 and 30 years.
|Single ($44,412 p.a.)||Couple ($62,828 p.a.)|
|25 years (to age 92)||$410,000||$480,000|
|30 years (to age 97)||$550,000||$610,000|
Calculated in today’s dollars using the Mercy Super Retirement Modeller. Assumptions used: homeowner with no other retirement income or assets, retirement age 67, allowance made for age pension, Balanced investment strategy with 6.4% post retirement return, administration fee 0.25% p.a. capped at $600, price inflation 2.0% p.a.
You can explore whether you’re on track for a comfortable retirement lifestyle by using the Super Guru Super Balance Detective calculator. This provides an estimate of the balance you should have now, based on your year of birth, to provide a comfortable lifestyle in retirement for a relatively healthy single person who owns their home outright.
If your retirement isn’t looking too comfortable, don’t worry – there are still ways to boost your super. Even if you only have a few years until retirement you can make a significant difference to your super and, in turn, your retirement lifestyle. You might like to consider:
You can also see what your retirement may look like by using our online Retirement planner. You can include your partner’s details and test what your likely retirement income could look like under different scenarios, including different: