How much super you actually need for a comfortable retirement revealed

Aussies might not need as much in their superannuation account as they thought to set themselves up for retirement, according to the latest figures.

Australians who are looking to retire may not have to worry too much about how much they need to have in their superannuation according to the latest figures.

Those looking for the bare minimum balance should have at least $100,000 in their super before retiring according to the Australian Super Funds Alliance’s (ASFA) latest retirement standard.

That’s around $45,106 per year for a couple and $31,323 for a single person aged between 65 and 84.

However, that figure jumps up dramatically if someone wants more than just the basics out of life.

ASFA says those who want a modest retirement should have at least $100,000 in the bank. Singles who want a comfortable retirement should have $595,000. NCA NewsWire / David Mariuz

Those who want to retire “comfortably” should have at least six times that amount in their account, with ASFA recommending couples have a balance of $690,000 or $595,000 for singles.

That’s a yearly spend of $69,691 per couple and $49,462 for a single person.

Part of the huge discrepancy comes down to lifestyle, with those looking for a “modest” retirement opting to rule out overseas holidays, eat out at restaurants less often, and spend less on heating and cooling.

Those are far from the only things that will have to be ruled out according to ASFA Deputy CEO Glen McCrea.

“We know that people spend more on their health as they get older and the comfortable budgets also allow for more out of pocket medical and dental expenses, along with other health related expenses,” he said.

“There is also less in the modest budgets for items such as clothing, hairdressing and streaming services. The phone and data plan is more restrictive as well.”

The ASFA standard also takes whether an individual or couple will gain access to the pension, with the government limiting how much a person can receive based on their assets.

Andrew Tratt urged couples to have at least one million dollars in their super to set them up for a comfortable retirement.

To receive the full pension a couple who own their own home must have assets under $419,000, which jumps up to $954,000 for the part pension.

There are also questions over whether the “comfortable” guideline offered by ASFA is all that enjoyable, with financial planner Andrew Tratt from Australian Wealth Advisers saying that the lifestyle offered by ASFA’s standard $70,000 per year for a couple sounds “horrible”.

“Most couples would want $80,000-$100,000 of expenditure per year to have a modest lifestyle,” he said.

“That’s not being extravagant, if you think about it’s really $1,000 a week for bills and living and then a $20,000 holiday at the end of the year.

“That doesn’t include incidentals or helping out the family or the kids or things like that.”

Mr Tratt believes those who wish to retire comfortably should have at least one million dollars in their super account, something financial planner with SMSF Darren Howard agrees with.

“You’ll be taking maybe a nice holiday each year and will be maintaining a not dissimilar lifestyle to what you might have had in your working like,” Mr Howard said.

Financial planner Darren Howard says that people should begin planning for their retirement 10 years before stopping work.

Mr Howard says that the ASFA’s figures might work for those living in cheaper parts of the country.

“Those estimates, they’re trying to find a balance between people that might be living in rural areas and then the city, I mean I live in Sydney and my sort of ballpark figure is a million dollars per person.”

Mr Tratt warned that the ASFA figures could spell trouble for your finances if unexpected costs pop up.

“Even though people might not spend all of their money each year, you just want that peace of mind that you can help the family out, you can upgrade that car, that you can do those things in retirement,” he said.

Those thinking about retiring should know that the earlier they start planning the better they’ll set themselves up for the future according to Mr Tratt

“We always get clients coming in when they want to retire next year, but you should seen us five years ago to set yourself up, you could have been doing so much more to benefit your situation,” he said.

Originally published as How much super you actually need for a comfortable retirement revealed