How much superannuation do I need to retire at 60 in Australia?
In Australia, things are looking up. However, how much superannuation is required to fund a comfortable retirement?
Of the 4.2 million Aussies in retirement in 2022-23, the average age at retirement was 56.9 years.
People aged 45 and over typically plan to retire at 65 years of age, on average.
Your needs will largely depend on your lifestyle.
Retiring at 60
Singles who plan to live modestly in retirement will need $32,930 a year.
The definition of a "modest" lifestyle according to the Australian Securities and Investments Commission (ASIC) is:
A modest retirement lifestyle is considered more advantageous than the Age Pension, but it only allows for the essentials.
Meanwhile, if you plan to live a "comfortable" lifestyle in retirement, AFSA estimates you'll need around $51,814 per year as a single person.
"Retirement is a time when you can do the things you want to do, rather than just doing what you have to do. It's about being able to enjoy your leisure time, pursue your interests, contribute to your community and have a good quality of life. You're no longer working, but you're still active and engaged in activities that bring you joy."
A comfortable retirement lifestyle allows an older, healthy retiree to participate in a wide range of leisure and recreational activities and maintain a good standard of living by purchasing things like household essentials, private health cover, a decent set of wheels, quality clothing, various electronic gadgets, and domestic and occasional trips overseas.
For couples, AFSA estimates needing $67,000 per year for a modest lifestyle and $105,000 for a comfortable retirement.
Both budgets assume that the retirees own their own home freehold and are in generally good health.
How much superannuation will you need?
According to AFSA, in order to fund these lifestyles as a retiree at 60, you will need the following (inclusive of pension):
Comfortable retirement:
- Singles $595,000
- Couples $690,000
Modest retirement:
- Singles $100,000
- Couples $100,000
The conservative retirement estimate takes into account the base rate of the Age Pension.
According to Equip Super's estimate, a person could potentially retire at 60 with a superannuation balance of approximately $515,000.
A couple retiring at 60 would require a combined superannuation balance of approximately $660,000.
What factors should you take into account?
Data from the ABS reveals that Aussies can expect to live until 81-85 years old.
If you're planning to retire at 60, your retirement funds will likely need to sustain you for 20 – 25 years or more.
When thinking about retirement, the Australian Retirement Trust recommends some important things to keep in mind:
- Your health
- Your employment situation
- The requirements of your position
- Your family or partner's circumstances
- Your superannuation and other savings
- Your belongings or possessions (assets)
- Any debts you have, such as credit cards or a home loan.
- Any big expenses like doing up the house, overseas trips, or medical bills.
- Will you be eligible for the Age Pension?
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This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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