Retirement lifestyle costs quick estimator

The ASFA Retirement Standard for the September 2011 quarter has just been released and reveals that “in general, a couple looking to achieve a comfortable retirement needs to spend $55,316 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $31,767 a year.”

One of the most useful elements of this quarter’s update is the release of an online quick estimator of your retirement lifestyle cost.

To estimate how much you need to save in order to make work optional (“retire”) on your terms you need to define your retirement lifestyle target. If you have no idea of how much to set for your retirement lifestyle target then use the quick estimator to get a feeling of what current retirees are spending. I recommend you shoot for the “comfortable” lifestyle target.

How much super you need to fund a comfy lifestyle

The biannual update of the ASFA Retirement Standard has just been issued showing that to live a comfortable lifestyle in retirement a couple would spend around $55,000 per year. That’s a $1,000 per year increase compared to the December 2010 study.

Perhaps the most interesting aspect of this release are the projections of how much superannuation you need to accumulate to fund that lifestyle.

To fund that comfortable lifestyle ASFA estimate you need to accumulate $510,000 in superannuation (combined, in today’s dollars.)

However, ASFA project that if your household has a combined income of $100,000 earning 9% superannuation contribution over thirty years will accumulate just $366,000 (in today’s dollars).

The moral of the story is a familiar one: 9% p.a. compulsory employer superannuation is not enough to enable you to retire on your terms.

Regular readers of The Money Guide hopefully have received that message loud and clear and have taken steps to boost their Financial Independence Fund.

Sadly we observe that most Australians only get the message in their 50s when it can be too late to make a big enough difference.




Dec 2010 qtr retirement cost statistics

For those thoroughly planning for their retirement you may be interested in the latest statistics of the actual amount spent by current retirees.

Previously I’ve written a more detailed article about retirement planning and this statistic – this article just advises you of the latest update.

The Westpac ASFA Retirement Standard for the December 2010 quarter shows that a couple wanting a comfortable lifestyle in retirement need to target to be able to afford to spend approximately $53,879 per year.

Those seeking a ‘modest’ retirement lifestyle need to spend $30,708 a year.

Download detailed budget breakdowns here.

The Westpac ASFA Retirement Standard assumes the retirees own their own home. It defines a modest retirement lifestyle as “better than the Age Pension, but still only able to afford fairly basic activities.”

A comfortable retirement lifestyle is defined as: “enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.”

I suggest most people do their planning with the aim of a comfortable retirement lifestyle. Our lifestyle expectations only seem to be expanding with every generation.