Monthly Economic Market Wrap

General advice warning:

The information contained in this report is for information purposes only and makes no recommendations. It has not taken into account your personal circumstances and situation and accordingly, it is not financial product advice and should not be relied upon as financial product advice.  Please speak with a financial adviser before making any investment decisions. 

How Much is enough?

The million-dollar question – how much do we need in retirement? 

Obviously, there is a not a one answer fits all approach that can be provided as there are so many different factors that need to be considered on an individual bases. 

To get to this answer we need to ask more questions:

These are the 20 questions every retiree, or want to be retiree, should be asking: How much income do I need in retirement?How much capital do I need to retire?Will you retire completely or semi retire for a period?Do you want to grow your capital in retirement?Are you happy to drawdown your capital in retirement?What assets are you prepared to sell to fund your retirement, and do you need to sell any at all?Are you wanting to stay in your home in retirement or are you prepared to downsize?How will you fund aged care and are you open to retirement community living?What are you going to do with your time? Travel? Activities?What is your passion and how much have you allocated to explore this?What will you do if you suffer the loss of a spouse?What will you do if one of you suffer a debilitating illness sick?What exercise or activity are you going to commit to and be active?What social interactions are you going to commit to and be socially fulfilled?What commitment to regular medical check-ups will you make to yourself?How much are you prepared to be tied to helping the grandkids?Do you have a professional team to help you with your finances as you age?Are you comfortable with an online solution for your superannuation?Should you retire? Or are you happy working…it is ok.Who are you working with to keep you accountable on all of these things?

From here is where we work with clients to help put the financial pieces together of the retirement puzzle to determine a realistic number that will help you achieve your ideal life in retirement. 

When thinking about how much you will need to live on in retirement, there is a vast array of information on the internet that can help get you started.

For this month’s show I did my own google searches and have sourced information from sites such as ASFA, ASIC, Canstar and the ABS.  Following are some snippets that I found, and it will show you a little bit about what you can find to help you get to that final number. 

The first question to ask ourselves is, what sort of lifestyle do we want in retirement? Everybody is different and it will change on a case by case basis. So for the purposes of this conversation, we’ve found some very broad, general definitions on on lifestyles, courtesy of The Australian Institute of Health and Welfare and the Association of Superannuation Funds of Australia (ASFA).

ASFA provides us with three broad groups: comfortable, modest and age-pension based.

The Australian Institute of Health and Welfare showed the following helpful information:

For more information, please visit https://www.superguru.com.au/retiring/how-much-super-will-i-need

https://www.aihw.gov.au/reports/australias-health/australias-health-2024-in-brief/summary  

A Comfortable versus Modest versus Age Pension based Retirement

Determining the amount of superannuation needed to retire in Australia depends on various factors, including your desired lifestyle, retirement age, and whether you own your home. Here’s an overview based on the latest data from the Australian Securities and Investments Commission (ASIC), the Australian Bureau of Statistics (ABS), and Services Australia. Home – Moneysmart.gov.au

Please note, these figures are based on the Association of Superannuation Funds of Australia’s (ASFA) estimate of howe much money is needed in retirement, depending on your lifestyle. They were updated as of the September quarter 2024 and can be found on Moneysmart.gov or at https://www.superguru.com.au/retiring/how-much-super-will-i-need

 

Note: Current Pension rates in Australia:

Assuming you were to qualify for the full rates, this would equate to the following annual figures:

• A single would receive $29,874 per annum.
• Couples would receive $45,037 (combined per annum).

https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?context=22526