I get this question a lot, not just at work, but basically the first question whenever I tell someone I am a financial planner.
Funnily enough, it might not be as much as you think, it just depends on what lifestyle you expect to live in retirement.
Here are the savings targets for current retirees (aged 65-69)
| If you will own your home when you retire and you live* | And you’d like to spend about this much in retirement^ | Then you need to save this much by the time you are 65, on top of income from the Age Pension | |
| Per fortnight | Per year | ||
| By yourself | $1,115 (Low) | $29,000 | $73,000 |
| $1,462 (Medium) | $38,000 | $258,000 | |
| $1,962 (High) | $51,000 | $743,000 | |
| In a couple~ | $1,615 (Low) | $42,000 | $95,000 |
| $2,154 (Medium) | $56,000 | $352,000 | |
| $2,885 (High) | $75,000 | $1,021,000 | |
* These targets assume you will own your own home outright (or otherwise won’t pay rent or a mortgage) when you retire.
~ Figures for couples represent the combined spending of two people living together.
^ Spending levels are in today’s dollars and have been adjusted for inflation. These levels are based on ABS data about retirees’ spending.
Source https: SuperConsumers
It seems to be a common misconception that the magic number is $1,000,000. I think where that has come into play is people aiming to have enough to preserve the majority of capital for inheritance reasons.
Something to be aware of with studies, like the one above, they are working off projections that will exhaust your pension, as this is the way it was designed.
Your account-based pensions weren’t designed to be maintained as an inheritance, but more and more people are using them for exactly that.
This means there really is no silver bullet or magic number, it really depends on what you want your money to do for you and/or your family/estate.
As always reach out to your advisor to help you work out what YOU need for retirement.
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