Consider these numbers around superannuation and your future:
For a comfortable lifestyle, a couple will require about a $510,000 super balance at the start of retirement.
A single retiree will require about a $430,000 super balance at the start of retirement.
How are you tracking?
And what does it take to end up with a super balance of that size, if relying solely on the 9.25% compulsory superannuation contributions?
Assuming 30 years of 9.25% contributions, a wage earner on $50,000 per annum is likely to have a super balance at retirement of $220,000.
Someone earning twice that amount, $100,000, will still only end up with $435,000.
That’s what we call ‘a very material gap’ between the required super balance and the likely super balance.
And what that really means, is a HUGE DIFFERENCE in lifestyle for the retiree.
For a couple on a single wage of about $100,000, this gap will be $75,000 and their likely super balance will be about 85% of the required balance.
Clearly, there are three options:
- Increase their contribution rate above 9.25% for the couple’s working life (say about 30 years); or
- The couple significantly downsizes their retirement lifestyle expectations; or
- The couple will have to extend their working life.
A useful reference for planning your level of retirement savings
To know whether your retirement savings will give you a comfortable or a modest standard of living, refer to the ASFA Retirement Standard.
This benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.
Although many of us have been brought up to see ‘being modest’ as a good thing, this certainly doesn’t apply to your retirement lifestyle!
How to get your super (and likely retirement lifestyle) on track…
To us, your superannuation is one aspect of your LifePlan. Superannuation is great, and you should take advantage of the tax advantages it offers.
Contact us to make a time to meet with us to discuss what’s involved in us documenting for you a clear LifePlan.
Your LifePlan will cover not just building your wealth, but also protecting your assets, managing your cash flow, tracking your expenditure and making sure that in 10 years’ time, you are where you want to be financially and lifestyle-wise.
The benefit of having McMahon Osborne Group develop your LifePlan is that we address ‘the big picture’ of your financial life, which is something that neither an accountant nor a financial planner can do in isolation.
The quality of your lifestyle in retirement is too precious to leave it to chance, and as you can see above, relying solely on compulsory superannuation is a recipe for a meagre lifestyle in retirement.
To assist you to get your Super on track, contact us TODAY on (03) 9744 7144 for a FREE 30 minute consultation. We can clearly show you, using our exclusive LifePlan Gap Analysis, your “big picture” and set out an action plan to help you on your way to achieving your retirement lifestyle!