How much do I need

What you need in retirement will depend on how much you spend each year and how long your money will need to last.

Your annual living costs in retirement

Most people have an idea of how much money they currently spend. But few are clear on how much money they’ll need in each year of retirement.

Research* has been undertaken to help people understand how much they’ll need for a modest or comfortable lifestyle. This comfortable lifestyle includes money for eating out, entertaining, local holidays, and the occasional trip overseas.

* The Association of Superannuation Funds of Australia has researched standards of living in retirement and suggest a budget to achieve a modest and comfortable lifestyle.

Modest budget

The modest budget noted above allows for the basics but very little else. For example, both eating out and entertaining at home are restricted and overseas travel is unlikely.

At the modest budget level, many retirees would not be able to participate in a range of sport and social activities that involve out-of-pocket expenses of various sorts.

Comfortable budget

The comfortable budget allows for entertaining at home on a fortnightly basis, several glasses of wine a week and regular dining at restaurants.

It also includes approximately $40 a week or so per person for expenditure on items such as the purchase of magazines, CDs and DVDs allowing greater enjoyment of printed material, music and movies.

To have a comfortable lifestyle, research shows that retired couples need an income of around $55,316 a year. This assumes that the retired couple owns their home.

The modest lifestyle requires an income of $31,767 per annum per couple.

In comparison, the Age Pension pays couples only $14,677 per annum each and a single person $19,468.80 per annum.

Is this enough to provide you with the type of retirement you want?