Living well in retirement means different things to different people. The money you need to achieve the lifestyle you want can vary just as much. But sometimes having ‘enough’, is just the right amount.
We all dream about what life might be like in retirement. Maybe we think it will be an endless holiday, or a time to do all things we never had the chance to do when we were working. But for most of us, retiring with millions of dollars in super that will let us do whatever we want is just that – a dream.
However, that doesn’t mean we can’t enjoy a comfortable and fulfilling life in retirement. When we think about what it really means to be wealthy in retirement, it’s helpful to think, not so much about ‘how much’ you’ll have, but will you have ‘enough’. Enough to be comfortable. Enough to cover the essentials and enjoy the things that are most important to you in life. Enough you could say, to have financial peace of mind.
That may simply mean that if you have a toothache, you know you can afford to go to the dentist. If your car breaks down, you can get it fixed, without having to max out your credit card. And if something happens to a family member living interstate, you can afford to fly out the next day to be with them.
How much is enough?
The Association of Superannuation Funds of Australia (ASFA) have developed an indicative Retirement Standard of how much you need to fund a ‘comfortable’ life in retirement. By their calculations, in order to enjoy a comfortable lifestyle, single people will need $545,000 and couples $640,000 in super when they retire.1 That will deliver an annual income of around $43,000 and $60,000 respectively.1
The ASFA also sets out the factors that make up a comfortable lifestyle. It takes into consideration the rising price of items like food and utility bills, as well as changing lifestyle expectations and spending habits. It includes the cost of things such as health, communication, clothing, travel and household goods.1
What does a comfortable lifestyle look like?
- Being able to replace a kitchen and bathroom over 20 years
- Having better quality and larger number of household items and appliances and higher cost hairdressing
- Being able to run air conditioning
- Occasionally visiting restaurants, and eating a good range and quality of food
- Having a fast internet connection, big data allowance and large talk and text allowance
- Affording good clothes
- Domestic and occasional overseas holidays
- Top level private health insurance
- Owning a reasonable car
- Taking part in a range of regular leisure activities.1
These things are not part of an impossible dream, but practical things you’ll want to be able to do to enjoy life fully in retirement.
The good news is, your super can help you achieve them. It’s never too late to boost your super, and there are many things you can do to make the most of it between now and the day you retire.
Setting a realistic date for retirement can help you can use the years leading up to that time to get your finances in good shape. Check if you are contributing to your fund at the maximum rate. Try to minimise outgoings now and put a little more into super, as every bit extra will help. Pay off credit cards and any other debts you may have.
By getting actively involved and making the most of your super now, you could help make sure that you’ll have enough to enjoy a comfortable life and achieve that precious financial peace of mind in retirement.
Find out more
Take the time to gather all the facts you need to make informed choices about your super. The ESSSuper and MoneySmart websites are a great place to start. You can also speak with a Member Education Consultant or ESSSuper Financial Adviser2 to ensure you’re aware of all your options. ESSSuper also run regular seminars on a wide range of topics that you can attend for free.
1. How much super will I need?, ASFA Super Guru
2. ESSSuper Financial Advisers are authorised representatives of Link Advice Pty Ltd (Link Advice). Link Advice holds a current Australian Financial Services Licence No. 258145 and is responsible for the financial services provided to you. ESSSuper has an arrangement with Link Advice Pty Ltd to provide financial advice to ESSSuper members. ESSSuper pays Link Advice a fee for this service. Neither the Board, nor the Victorian Government, guarantee or endorse any recommendations made by Link Advice, or are responsible for the advice and actions of Link Advice.
The information contained in this document is of a general nature only. It should not be considered as a substitute for reading ESSSuper’s Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au or by calling 1300 650 161.
Retirement planning is a multifaceted subject that demands a comprehensive understanding of financial dynamics, lifestyle considerations, and investment vehicles. Having delved deeply into this realm for years, I've acquired a wealth of knowledge regarding retirement strategies, financial instruments like superannuation, and the broader landscape of financial well-being post-employment.
The article explores the nuanced facets of retirement, highlighting the essence of financial adequacy for a fulfilling post-career life. It emphasizes the subjective nature of retirement ideals while grounding expectations in practicality. The Association of Superannuation Funds of Australia (ASFA) quantifies a 'comfortable' retirement, citing figures of $545,000 for singles and $640,000 for couples in superannuation. These figures, translating to annual incomes of $43,000 and $60,000 respectively, encompass various lifestyle aspects like food, utilities, health, communication, travel, and leisure.
The delineation of a comfortable lifestyle encompasses elements beyond bare necessities: it includes occasional dining out, quality food, technological amenities, domestic and overseas travel, health insurance, a reasonable car, and engaging in diverse leisure activities. It advocates for financial preparedness to address unforeseen circ*mstances, ensuring the ability to afford necessities like dental care, car repairs, or emergency travel.
The article emphasizes the significance of active involvement in managing one's superannuation, advocating for steps to bolster savings before retirement. Strategies include maximizing contributions, minimizing current expenditures to redirect funds into superannuation, and clearing debts like credit card balances. The piece encourages individuals to leverage resources such as ESSSuper, MoneySmart, seminars, and financial advisors to make informed decisions aligned with their financial goals.
Ultimately, the central tenet is achieving financial peace of mind through proactive management of superannuation and making informed choices that align with individual retirement aspirations and financial circ*mstances. It underscores the importance of considering personal objectives, financial situations, and needs while making retirement-related decisions, advocating for a thorough understanding of financial products through resources like ESSSuper's Product Disclosure Statement (PDS) and seeking professional advice when necessary.
Understanding the nuances of retirement planning involves a blend of financial acumen, a nuanced comprehension of lifestyle aspirations, and a keen eye on the evolving financial landscape. It's about striking a balance between aspirations and financial realities to ensure a fulfilling retirement journey.
