How much super will I need?

Australians can now expect to live well into their eighties, so you may need to budget for 20 years or more of retirement living. How much you’ll need to fund those years depends on your lifestyle preferences and the choices you make.

There are a few industry guidelines designed to help you figure out how much money you’ll need in retirement. The Association of Superannuation Funds of Australia (ASFA) Retirement Standard and the Super Consumers Australia guide are commonly referred to and make a useful starting point.
 

The ASFA Retirement Standard

Established in 2004, the ASFA Retirement Standard breaks down the expenses for singles and couples during retirement – and provides an estimated superannuation balance needed to achieve a healthy and comfortable lifestyle. The ASFA standard assumes you own your home, so you’ll need to factor this in if you’re renting in retirement.
 

According to ASFA a 'comfortable' lifestyle will cost a couple $72,663 per year (with a combined super balance at retirement of $690,000) while a single person needs $51,630 per year (with a super balance of $595,000).¹
 

The Super Consumers Australia guide

The Super Consumers Australia guide is another publicly available tool designed to help you work out how much you need to save for retirement. It factors in the government Age Pension and is based on data from the Australian Bureau of Statistics about the spending habits of retirees. It assumes you’ll own your home and won’t be paying rent or mortgage repayments once you’ve retired.
 

The guide estimates a 'medium' lifestyle will cost a couple who are already retired about $60,000 per year (with a required super balance at retirement of $371,000). A single person would need $41,000 per year (with a super balance of $279,000).²
 

Published industry standards can be useful guides, but they don’t consider your individual wants, needs or circumstances, and they make some assumptions that may not apply to you.

Your retirement is about you – your circumstances, your choices, and the lifestyle you want. Taking some time to identify your needs and what your costs are likely to be will help you set your own retirement standard and figure out how much you’ll need to save to pay for it.

Your housing costs are a big part of your retirement calculations:

If you’re paying off your home – You may be able to use some of your super (when available) to pay off your mortgage. Or you could consider downsizing to free up some money to finish paying off your home, support your lifestyle or relocate to be closer to family.

Downsizing may have an impact on your tax situation and any government benefits you receive – so it’s a good idea to speak to a financial adviser first.

If you’re renting – If you rent and get payments from Centrelink – like the Age Pension – you may be eligible for extra rent assistance. If you’re struggling with your rent or you’re not sure about your rights as a tenant, you can get free advice from the National Debt Helpline.

Getting older also comes with changing care needs, which need to be factored into retirement planning. Whether it’s extra help around the house, retrofitting your home so you can live independently for as long as possible, moving into a retirement community or an aged care home, it’s important to consider your preferences and needs as you get older.

Mercer Super members have access to ageing care advice and support through Care & Living with Mercer. Expert care consultants can help you understand your current and future care needs and navigate through different options, government benefits and levels of support available to you or a loved one.

How are you tracking?
 

Use our Retirement Income Simulator to find out how much you're likely to have at retirement as well as steps you might take to improve your position