Retiring comfortably

Are you on track to a comfortable retirement? Find out today.

Where are you going?

Choosing the investment that's best for you comes down to knowing where you're headed. So whether retirement is forty years away or forty weeks, start by mapping out some of your broader retirement goals:

• When do you plan to retire?
• How far away is that day, and how long does it give you to save?
• Do you plan to retire completely, or continue to work part-time?
• How long could your retirement last?

Once you’ve figured out your broad retirement goals, start thinking about the specifics.

How much super will be enough?

The amount of super you'll need depends on your idea of a 'comfortable retirement'. Will you be happy with a modest lifestyle that provides you with the basics, or would you prefer a lifestyle that includes extras like eating out, holidays and hobbies?

As a rule of thumb, experts generally advise that you aim for an annual retirement income of around 65% of your final annual salary.

How long do you have to save?

It's also important to consider the length of time you have to save before you need to access your super. The longer you have to invest, the more likely you'll be able to ride out the short-term ups and downs associated with investments in assets like shares, property and alternative investments and enjoy the potential for higher long-term returns.

But if you have a shorter investment time frame, you may prefer the lower risk/lower return characteristics of asset classes such as cash and fixed interest.

How do you feel about investment risk?

How do short-term fluctuations in the investment markets make you feel? Do they worry you, or do you take it all in your stride and focus on long term performance?

If you don't like uncertainty, growth assets such as shares and alternative investments may cause you ongoing anxiety. So perhaps an investment option comprising some lower risk asset classes may be more suitable.

On the other hand, you may be happy to ride out the occasional falls in the market and slumps in performance to give your investments the potential to provide long-term rewards. In this case, you might be comfortable choosing investment options with higher risk and return profiles.

Compare the investment options using the Investment Choice Calculator.

The cost of a comfortable retirement

It's hard to imagine how much you'll need in retirement. But setting your retirement goal is simpler than you think.

This table provides an example of how much you may need for a comfortable retirement – so you'll have enough to cover the basics, plus the odd night out, some holidays, good clothes, private health insurance and other creature comforts. Of course, you may need to allow more or less than shown in the table, depending on your circumstances.

Income required to support a 'comfortable' lifestyle in retirement

Source: Wespac-ASFA Retirement Living Standard (December quarter 2006).
Note: The above calculations assume home ownership.

This table is for illustrative purposes only and does not take into account your personal financial circumstances.

The impact of inflation

Inflation is a term used to describe the rising cost of living – measured by the Consumer Prices Index (CPI) which generally increases each year. For example, while a litre of milk may have cost $1 ten years ago, you'll need around $2 to buy exactly the same thing today.

The buying power or real return from an investment is the return that you receive over and above inflation. To make real gains from your investment, the returns need to outpace inflation.

Investment return – CPI = the real return on your investment

We all want our investments to grow in value over time, but it’s important to ensure that your growth rate is greater than CPI. Otherwise, while your dollar amount might increase over the years, your buying power won't.

Each investment option in UniSuper’s Investment Choice range aims to outperform CPI by a specified percentage (at least) each year.