27 Sep How Much Do You Need to Retire in 2024?

Retirement is a significant milestone that requires careful financial planning to ensure you can maintain your desired lifestyle. Understanding how much you need to retire comfortably is crucial, as is knowing what options are available to supplement your income. Here’s a breakdown of the funds required for different retirement standards in 2024, based on the ASFA Retirement Standard and the Australian Government Age Pension.

Comfortable Retirement

A comfortable retirement enables retirees to maintain a high quality of life, which includes enjoying leisure activities, moderate domestic and international travel, and access to private health insurance. According to ASFA, as of March 2024, the projected annual budget for a comfortable lifestyle varies depending on different households and living standards for individuals aged 65-84 (June quarter 2024)

• Single: $52,085 per year
• Couple: $73,337 per year

To generate this level of income, a retiree would typically need a superannuation balance of approximately:

• Single: $595,000
• Couple: $690,000

These figures assume that retirees draw down on their capital and receive a part government Age Pension.

Modest Retirement

A modest retirement is more constrained, covering basic living expenses and some recreational activities, but with limited budget for extras. It’s a step above the Age Pension, but significantly below the comfortable standard. The estimated annual budget for a modest lifestyle is:

• Single: $33,134 per year
• Couple: $47,731 per year

For this lifestyle, a lower superannuation balance is required:

• Single: $100,000
• Couple: $100,000

This estimate also assumes that retirees will receive a part government Age Pension to supplement their income.

Age Pension

For those who have not accumulated significant superannuation savings, the Age Pension provides a basic income stream. The maximum Age Pension rates as of March 2024 are:

• Single: $1,064.50 per fortnight (approx. $27,677 per year)
• Couple: $1,604.80 per fortnight combined (approx. $41,725 per year)

The Age Pension is means-tested, meaning the amount you receive depends on your income and assets. The pension can be reduced if your assessable assets exceed the threshold, which is:

• Single homeowner: $301,750
• Couple homeowner: $451,500

For non-homeowners, the thresholds are higher.

How Much Do You Need?

The capital balance required for retirement depends on the lifestyle you wish to maintain. To retire comfortably, a balance of approximately $600,000 to $700,000 is recommended. For a modest retirement, you might only need around $100,000. However, these amounts assume some reliance on the government Age Pension.

The key is to consider your desired lifestyle and plan your savings accordingly. Starting early and making regular contributions to your superannuation can help you achieve the retirement you want. Consider speaking with a financial adviser to tailor a retirement plan that suits your specific needs.

This article was originally produced by ASFA the voice of super. You can read the full article here.

Important information and disclaimer

The information provided in this document is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide.

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