Retirement is an exciting stage of your life — it’s goodbye to the 9-to-5 and hello to more time for hobbies, loved ones and relaxation. But while the work stops, you’ll still need money to fund your lifestyle and expenses, so the real question is- How much will I need in retirement? Let’s look at ways to approach working out your retirement budget.
Drafting your retirement budget
You can use your current expenses as a guide to what your outlays might look like in retirement. Start by making a list of your monthly outgoings. If you’re not sure how much you spend, review your bank statements and note any regular payments and patterns. Now, consider what’s likely to change or stay the same. For example, your daily travel expenses might decrease since you won’t be commuting to work, while your grocery bills may remain steady. You could also think about additional costs that may arise over time, such as extras on pharmaceuticals and supplements.
The Association of Superannuation Funds of Australia (ASFA) provides a detailed breakdown of potential retirement budgets — it’s a great resource to map out the sorts of things you might need to fund, depending on the kind of lifestyle you’re hoping for.
Bigger retirement goals
It’s common to have some bigger goals set for retirement. Many people look forward to travelling, whether jetsetting overseas, taking an annual cruise or loading up the van to explore locally. Renovations may also be on the cards, or even a change of location. As these activities may be costly, you’ll need to factor them into your retirement budget yearly budget to fund one off expenses.
So how much will I need?
Listing your future goals and expenses can help you estimate how much you’ll need to fund your retirement. ASFA also publishes a retirement standard which shows the approximate annual cost of a ‘comfortable’ and ‘modest’ retirement lifestyle. For example, a couple who own their home would need around $70,500 p.a. to fund a comfortable lifestyle. If the same couple were happy with a modest lifestyle, $46,000 p.a. would suffice.
Where will your money come from?
Superannuation will likely be your main source of income during retirement, but you could also be eligible for a part or full government age pension. Investments outside super may also help cover your living expenses. Some retirees may consider downsizing the family home or taking on part-time work to boost their income by investing further funds into superannuation which allows for additional contributions over the contribution cap.
There’s a lot to think about — speaking to our Oran Park or Norwest/ Baulkham Hills office about your retirement plans can get you on track to optimise your finances so you can look forward to enjoying retirement. So why don’t you call us on (02)9188 1547 or email email@example.com
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The information in this website and the links has been prepared for general information purposes only by our office and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax, personal or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned on this website, consult a professional financial advisor to consider whether it is suitable and appropriate for you and your personal needs and circumstances.