How much do I need in super when I retire?
Would it shock you if I said it isn’t the same $ amount for everybody?
Perhaps a better question is, how much income do I need every year when I am retired? Let’s work backwards from there and consider these important questions:
What age do you plan to retire?
What debt do you have to pay off at retirement? Mortgage, other? This may need to come out of your super fund first.
Are there any big expenses that will require a lump sum withdrawal from your super fund? House upkeep/renovations?
Replacement of vehicles, caravans, boat, golf buggy, how much and how often?
Do you plan to holiday every year and what will you spend?
Will you gift money to your family, children or grandchildren?
What assets outside of super do you have that produce income and what do you plan to do with them? For example, investment property, investments, shares etc. What are the CGT implications if you sell them, should you sell them and if so when?
How much will it cost you for living expenses every year?
Will you stay in your current home or downsize at some point?
Will you be eligible for the aged pension at some stage?
(This is not an exhaustive list)
An exercise I like to do with my clients is to use a tool to project retirement income (pension payments) minus expenses, to give them some idea of what may happen to their residual superannuation balance over time. A Financial Planner (the hint is in the name) will be able to give you greater insight into how long your super is likely to last. This will help you to plan for the amount of super you want to have at retirement to fund the rest of your life.
I know I have asked you a lot of questions, but maybe it has got you thinking and you want to find out more. Given we all have different goals and objectives, the amount in super that you need, will be different from others - therefore the smart thing to do is to speak to a Financial Planner now and ‘plan’ ahead.
Last question:
Do you want to spend it all or leave some for others?
General Advice Warning: The information in this post has been prepared for general information purposes only and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned on this post, consult a professional financial advisor like myself to consider whether it is suitable and appropriate for you and your personal needs and circumstances