|First published: 2 August 2019
The Association of Superannuation Funds of Australia (ASFA) Retirement Standards are published four times each year, giving those still working an idea of the annual budget they might need to fund either a modest or comfortable standard of living once retired. Both budget types assume that the retirees own their home outright and are relatively healthy.
According to ASFA, a modest retirement lifestyle is considered better than the Age Pension, but it still only enables retirees to afford basic leisure activities*.
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a variety of leisure activities and to have a good standard of living. They may be able to purchase items such as household goods, private health insurance, a reasonable car, good clothing, electronics, and domestic and occasionally international holiday travel.
According to the ASFA Retirement Standard March quarter 2019, self-funded single Australians (aged 65-85) will need $43,255 in superannuation per year to live comfortably during retirement. Self-funded couples will need $61,061 in superannuation per year for a comfortable retirement lifestyle^.
Single Australians (aged 65-85) seeking a modest lifestyle during retirement, will need $27,646 per year to retire, whilst couples will need $39,848 per year.
If these figures come as a surprise, there are steps you can take today to grow your super for the future.
1. Continue to build your super with additional contributions
You can do this either through before-tax contributions (salary sacrifice) or after-tax contributions from your take-home pay.
Depending on your salary, salary sacrificing may reduce your income tax. Before-tax super contributions are taxed at 15%, which is generally less than your marginal tax rate, which could be as high as 47% for some people.
It’s important to understand how much you can contribute to your super. The Australian Government has implemented contribution caps which limit the amount that can be contributed to your superannuation each financial year. To learn more about contribution caps, check out LGIAsuper’s handy online info sheet.
2. Take a long-term view when it comes to super investments
Long-term investment goals can be impacted when decisions are based on short-term market movements. Review your investments and ensure they are positioned right for your risk appetite and stage of life.
3. Get advice
To make sure your retirement plans are on track, you may want to consider seeking advice. By talking to our team of friendly, expert advisers, you can start planning for a better financial future. Call us on 1800 444 396, and we can discuss the best advice option for you.
Alternatively, you can reserve a seat at one of our Retiring right seminars, being held across the state. To book, visit www.lgiasuper.com.au/seminars