How much retirement income will you need?

Wondering how much money you should aspire to save in your super fund by the time you retire? Considering the level of income you’ll require to maintain your lifestyle in retirement is a good first step, and provides an indication of how much you should aspire to save by the time you leave the workforce.

The Association of Super Funds of Australia (ASFA) suggests the following benchmark to measure how much annual retirement income a single person or a couple may need, depending on whether they aspire to live a modest or comfortable lifestyle. It is updated quarterly to reflect inflation:

Modest lifestyle - single
Modest lifestyle - couple
Comfortable lifestyle – single
Comfortable lifestyle – couple

$23,489 p.a

$33,784 p.a

$42,597 p.a

$58,326 p.a

(Figures based on September 2014 quarter)

Visit http://www.superannuation.asn.au/resources/retirement-standard to find out more about what is included in the benchmarks. While this is only a guideline, and everyone’s needs are different, getting a ballpark figure now can help you manage your superannuation so that you are on track to accumulate the balance – and retirement income - you will need.

Calculate your projected retirement income

So how do you know whether your superannuation fund will provide you with enough retirement income? First of all, check your current super balance. Some funds make it easy for you to check online, but you can also call your provider or check your latest super statement for an indication.

Then, use a retirement calculator to work out your projected retirement income once you leave the workforce.

Need to increase your retirement income?

If your projected retirement income falls short, there are actions you can take to improve your superannuation balance now to help increase your retirement income in the long run.

Retire later. Working past the official retirement age, and delaying access to your superannuation for a few years, could give you more time to accumulate savings which may provide you with a greater retirement income.

Consolidate your super in a lower fee or fee free fund. Administration and management fees can have a substantial negative impact on your overall super balance, especially if you are paying multiple fees on multiple super funds. To maximise your super, and protect your retirement income, consolidate your super into one low-fee or fee-free super fund.

Make additional contributions. If you are in a position to contribute extra into your super fund, consider whether you can salary sacrifice part of your salary into super. While limits apply, it can be tax-effective.

Review your investments. Depending on your circumstances, and your attitude to risk, you may be able to grow your super fund by getting a better return on your existing investments. Your investment strategy may change over time, so consider speaking to a financial adviser for tailored advice.