Have you heard the mantra that you’ll need $1 million or more to retire? It’s the figure often thrown around as the financial retirement ideal. But everybody has different ideas and means for their retirement. There is no magic super number.
Most people heading into retirement will not have $1 million in super. In fact, the most recent Australian Bureau of Statistics (ABS) data shows that at retirement age, men have an average balance of $322,000 compared to $180,000 for women.
The suggestion that you’ll need $1 million in retirement ignores the role of the government Age Pension. Yet, seven out of 10 older Australians receive either a part or full Age Pension, according to the ABS. So it is unlikely that super will be your only source of retirement income.
To start working out how much you might need for retirement, you may wish to consider the following.
Your day-to-day expenses
Finding your own retirement number starts with a retirement budget. You’ll have to plan for daily expenses and even for unexpected costs. And how much money you’ll need to retire will also depend on any outstanding debts you have.
Eligibility for government entitlements
The Age Pension is a government entitlement paid to people who meet the age and residency requirements. The amount you receive depends on a range of factors, such as your assets, how much super you have and any other income you may receive in retirement such as rental returns.
If you’re not eligible for the Age Pension, you may be eligible for other benefits such as a Seniors Health Card, which can assist you with the cost of prescription medication and other health services.
