It can be hard to plan for a lifestyle you haven’t started living yet. According to Money Smart, you can expect to spend around 67% of your current income annually in retirement.
Consider your priorities
The way you spend your time and the standard of living you want will both have a substantial impact on how much income you’ll need once you retire. Do you expect your lifestyle and spending habits to change in retirement? Do you have a list of holidays or adventures you’re looking forward to? Or do you plan on spending time with family and friends or doing volunteer work?
It’s not uncommon for retirees to pick up part-time work to help stretch the savings a little further so they don’t have to compromise on their retirement lifestyle. However, if you’re ready for full-time retirement, this may not be a suitable option for you.
Budget and spending
There’s a rule of thumb that suggests you should aim for around 70% of the salary you had while you were working - in order to maintain your lifestyle in retirement. The Association of Superannuation Funds of Australia (ASFA) publishes their ‘Retirement Standard’ figures every quarter to help retirees with their income expectations. In March 2023, ASFA suggested an annual income of around $70,482 for a couple to live a comfortable lifestyle in retirement. In ASFA terms ‘comfortable’ means enough to enjoy recreation activities, have private health insurance, own a reasonable car, buy household goods when they need them, and take regular holidays.
Of course, these are estimates, and your situation will vary. The ASFA figures are updated quarterly and may be a good starting point for estimating your expenses.
Set yourself a retirement budget
If you’re struggling to get your head around an overall figure, it might be helpful to set yourself a budget. A budget can help give you an idea of what your financial needs will be in retirement.
MoneySmart has a budget planner to help get you started. Don’t forget to think about how your spending habits may change once you’ve retired. While some of your current expenses may disappear (like a mortgage), remember to also think about any new expenses that may emerge in retirement. You may travel more than you currently do. On the other hand, your health needs may change, which means you may need to spend more on health-related expenses.
Whatever retirement looks like for you, money can either limit your plans, or make them possible. To give you a better understanding of what level of income you might expect to live on in retirement, you need to think about the sort of retirement you have in mind. Consider seeing a financial adviser to fine-tune your budget and create a retirement income plan.
If you want to see how much super you could end up with, and the income this can provide, you can use our retirement savings calculator. If you want to hear more about retirement planning, our retirement considerations webcast can help.
If you’d prefer to speak to someone about your super, you can make an appointment with one of our super consultants. They provide information and general advice across a range of topics at no extra cost, whether you’re a UniSuper member or not. Book an appointment in-person on campus, via video or over the phone, or call 1800 823 842.