Will your super be enough for the lifestyle you want?
Most people know how much they have in super right now, but do you know how much you’ll have by retirement? More importantly, how much will it actually cost to fund the lifestyle you want when you finally decide to step away from work?
Everyone is different and it’s worth considering what you’re trying to achieve before answering these questions.
Given our current life expectancies, if the average person stops work at age 65 they will need to figure out how to fund living expenses for the next 20 years or more.
Current guidelines from the Association of Superannuation Funds of Australia (ASFA) estimate that a comfortable lifestyle could require around $545,000 in super for singles before retiring. This translates to approximately $44,183 a year or $849 a week in living expenses. For couples, this figure goes up to $640,000 or $1,200 a week.*
If these figures look surprisingly high, it’s because the majority of Australians actually fall short of this target. So what can you do to today to ensure you achieve the lifestyle you want in the future?
The first step is working out exactly how much you’ll need to fund the life you want and what a “comfortable” standard looks like for you. From here you can work backwards and figure out the best way to achieve your target.
This often means making the most out of your superannuation and the key to this is to make your capital work for you as effectively as possible. Some easy steps anyone can look at to increase their balance include:
- Making extra contributions to super. Government legislation has made superannuation one of the most tax-effective environments to invest your money.
- Consolidating your accounts. Multiple superannuation accounts often mean multiple sets of fees which will eat away at your retirement balance over time.**
- Look at your underlying investment options. Superannuation investments generating a lower than desired return can have a huge compounding effect over the course of a lifetime.
There are countless different strategies you can utilise to help match your super with the retirement lifestyle you want, however, navigating the superannuation environment and working out a retirement plan can get complicated. This is where seeking professional help from a financial adviser can add a lot of value and help take some of the stress away.
It’s never too soon to start planning for a better financial future. Don’t wait until you’re a few years away from retirement. Whether or not you choose to seek professional advice, the most valuable thing you can do is to start planning for your financial future today.
**Please note, consolidating your super may result in the loss of important features & insurances. Please contact your fund or financial adviser before considering any rollovers